Bitcoin (BTC), the world’s first and largest cryptocurrency by market capitalization, has once again bounced at support in the $29,500 area and was last changing hands just above $30,000.
BTC has tested key short-term support in the mid-$29,000s on multiple occasions so far this week, with the bulls for now holding firm.
The cryptocurrency has been stuck within $29,500-$30,500 ranges for nearly a week now after hitting its highest level of the year last Friday in the $31,800s, boosted 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 a lack of notable US macro events, or any major updates on the topic of US crypto regulation/institutional adoption.
Bitcoin’s short-term momentum would take a turn for the better if it was able to break above its 21-Day Moving Average.
The 21DMA was last just under $30,400 and has acted as strong short-term resistance on a few occasions in the past few days.
Indeed, a break above here could open the door to a run higher towards the upper bounds of bitcoin’s multi-week range in the $31,000s.
Luckily for those who have grown wearisome of the bitcoin market’s boring trading conditions in recent weeks, a big macro catalyst is coming up next week that could trigger some breakouts.
Will the Upcoming Fed Meeting Break Bitcoin (BTC)’s Slumber?
The US Federal Reserve is widely expected to lift interest rates by 25 bps at next week’s policy announcement, taking interest rates to their highest level since 2001 at 5.50-5.75%.
While key officials at the US central bank have signaled that there could be another hike in September as well, most economists, and even a notable former Fed member, think this will be the last rate hike of the cycle.
As per the CME’s Fed Watch Tool, US money markets price an implied probability of around 84% that the Fed leaves interest rates unchanged in September after next week’s hike.
While the still very strong US labor market means that rate cuts aren’t likely any time soon (given a strong labor market helps fend off recessions and is inflationary), recent positive developments relating to US inflation have convinced most market participants that another hike won’t be needed in September.
The Fed is likely to want to keep its options open for another hike in September, just in case inflation starts heating up again.
But the central bank may take a softer tone on the need for more hikes, which would be interpreted as a nod to the fact that the market could well be right not to bet on more rate hikes.
Next week’s meeting could thus mark a key turning point in the US, and global, macro cycle.
A point where we transition from a world of tightening financial conditions to a world of loosening financial conditions.
Anticipation of this turning point has been an important tailwind for bitcoin in 2023, after the Fed’s aggressive tightening in 2022 was attributed as the main bearish catalyst for the bitcoin market.
Bitcoin bulls will be hoping that the animal spirits relating to easier financial conditions ahead return to the crypto market next week.
That, combined with optimism about institutional adoption in wake of recent spot bitcoin ETF filings from Wall Street heavyweights like BlackRock and the SEC’s recent partial defeat at the hands of Ripple, 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 for 2023) also adds to the bullish case, as do various widely followed on-chain indicators that have in recent months been sending strong signals that we are in an early-stage bull market.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
This news is republished from another source. You can check the original article here.