Bitcoin (BTC), the world’s first and largest cryptocurrency by market capitalization, has once again bounced off the support in the $29,500 area and was last changing hands above $30,000.
BTC has tested key short-term support in the mid-$29,000 range on several occasions so far this week, and bulls are still holding strong.
The cryptocurrency has been stuck in a $29,500-$30,500 range for nearly a week after hitting a year’s high of $31,800 last Friday, fueled at the time by optimism about a US judge’s ruling on XRP in the SEC vs. Ripple Labs lawsuit.
Rangebound BTC trading conditions haven’t been too surprising this week, given the lack of notable US macro events, or any major updates on the topic of US crypto regulation/institutional adoption.
If bitcoin is able to break above its 21-day moving average, its short-term momentum will improve.
The 21DMA was last held below $30,400 and has acted as strong short-term resistance on a few occasions over the past few days.
In fact, a break above here could open the way for a move towards the upper limit of bitcoin’s multi-week range at $31,000.
Luckily for those who have tired of the boring trading conditions in the bitcoin market in recent weeks, there is a big macro catalyst coming up next week that could trigger some breakouts.
Will the upcoming Fed meeting give Bitcoin (BTC) sleepless nights?
The US Federal Reserve is expected to hike interest rates by 25 bps in next week’s policy announcement, taking interest rates to their highest level since 2001 at 5.50-5.75%.
While key US central bank officials have indicated there could be another hike in September, most economists and even one notable former Fed member believe this will be the last rate hike of the cycle.
According to the CME’s Fed Watch tool, US currency markets have about an 84% implicit probability that the Fed will leave interest rates unchanged in September after next week’s hike.
While a still very strong US labor market means that a rate cut is unlikely anytime soon (a strong labor market helps prevent recession and pushes up inflation), recent positive developments related to US inflation have convinced most market participants that another hike in September will not be needed.
The Fed is likely to keep its options open for another hike in September if inflation starts rising again.
But the central bank may take a softer stance on the need for more hikes, which would be interpreted as an indication of the fact that the market may be right not to bet on more rate hikes.
Next week’s meeting could thus prove to be a turning point in the US, and global, macro cycle.
A point where we transition from a world of tight financial conditions to a world of loose financial conditions.
The anticipation of this turning point has been a significant tailwind for bitcoin in 2023, with the Fed’s aggressive tightening in 2022 being attributed as the main bearish catalyst for the bitcoin market.
Bitcoin bulls will be hoping that animal spirits related to easier financial conditions will return to the crypto market next week.
The recent spot bitcoin ETF filing from Wall Street heavyweights like BlackRock and the SEC’s partial defeat at the hands of Ripple, combined with optimism about institutional adoption, could be enough to send bitcoin to fresh yearly highs.
Traders should also note that Bitcoin’s bullish long-term technical set-up (a strong uptrend to 2023) also adds to the bullish case, as various widely followed on-chain indicators have been sending strong signals in recent months that we are in an early-stage bullish market.
Disclaimer: Crypto is a high risk asset class. This article is provided for informational purposes and does not constitute investment advice. You can lose all your capital.