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The crypto disaster or a new historic record in the making?
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- Bitcoin price shows no signs of directional bias as it hovers around $66,000.
- The 2019 BTC price fractal hints at a potential correction if the US Fed cuts interest rates.
- Investors can expect a retest of the $60,000 to $45,000 levels depending on the severity of the fall.
No high-impact events could influence the market this week. So let’s focus on cryptocurrency the market absence of directional bias. From a global perspective, the reason for this uncertainty could be attributed to the US Federal Reserve or the macroeconomic landscape. But Bitcoin (BTC) is also responsible for this lack of direction and unstable market outlook.
The US Fed’s fight against inflation
The Fed has been battling inflation since the 2020 pandemic and brought it down from a peak of 9.1% in mid-2022 to 3.3%. However, the central bank failed to bring it back to its 2% target, although it kept the target federal funds rate, in other words the interest rate, within a range of 5.25% to 5.50% since July 2023.
US Federal Reserve Federal Funds Rate
Historical data suggests that if interest rates remain high for longer, it could shatter the economy, triggering a market-wide sell-off.
The US Fed increased interest rates from 0.75% in January 2017 to 2.5% in December 2018. After that, rates remained at the maximum level until the end of July 2019. However, the Fed decided to reduce interest rates in February 2020 to near zero. in order to cushion the effects of the market fall due to the COVID-19 pandemic.
BTC/USD 1-day rate chart versus Fed Funds
Interestingly, crypto markets were the first to collapse and began their descent after the Fed began cutting interest rates in July 2019. It makes sense that BTC formed a high local in 2019 and collapsed as investors would choose to dump the riskiest assets first. Thus, the Fed pivot created a risk aversion scenario, leading to a crypto correction.
BTC Fractal 2019
For now, the interest rate has remained between 5.25% and 5.50% for almost a year, with rumors of a fed pivot to lower rates around the corner. This upcoming development has led many to speculate that the crypto could set a local price top.
Such a development could see BTC reach the $61,000 to $60,000 level first. Beyond that, BTC could slip as low as 24% to $45,400, especially if the 2019 fractal repeats.
BTC/USD 1-day and 12-hour chart
A complete invalidation of this bearish outlook could occur if BTC manages to overcome the $71,150 resistance level and turn it into a support floor. Such a move could see BTC challenge the all-time high of $73,794 and set a new one at $80,000.
- Bitcoin price shows no signs of directional bias as it hovers around $66,000.
- The 2019 BTC price fractal hints at a potential correction if the US Fed cuts interest rates.
- Investors can expect a retest of the $60,000 to $45,000 levels depending on the severity of the fall.
No high-impact events could influence the market this week. So let’s focus on cryptocurrency the market absence of directional bias. From a global perspective, the reason for this uncertainty could be attributed to the US Federal Reserve or the macroeconomic landscape. But Bitcoin (BTC) is also responsible for this lack of direction and unstable market outlook.
The US Fed’s fight against inflation
The Fed has been battling inflation since the 2020 pandemic and brought it down from a peak of 9.1% in mid-2022 to 3.3%. However, the central bank failed to bring it back to its 2% target, although it kept the target federal funds rate, in other words the interest rate, within a range of 5.25% to 5.50% since July 2023.
US Federal Reserve Federal Funds Rate
Historical data suggests that if interest rates remain high for longer, it could shatter the economy, triggering a market-wide sell-off.
The US Fed increased interest rates from 0.75% in January 2017 to 2.5% in December 2018. After that, rates remained at the maximum level until the end of July 2019. However, the Fed decided to reduce interest rates in February 2020 to near zero. in order to cushion the effects of the market fall due to the COVID-19 pandemic.
BTC/USD 1-day rate chart versus Fed Funds
Interestingly, crypto markets were the first to collapse and began their descent after the Fed began cutting interest rates in July 2019. It makes sense that BTC formed a high local in 2019 and collapsed as investors would choose to dump the riskiest assets first. Thus, the Fed pivot created a risk aversion scenario, leading to a crypto correction.
BTC Fractal 2019
For now, the interest rate has remained between 5.25% and 5.50% for almost a year, with rumors of a fed pivot to lower rates around the corner. This upcoming development has led many to speculate that the crypto could set a local price top.
Such a development could see BTC reach the $61,000 to $60,000 level first. Beyond that, BTC could slip as low as 24% to $45,400, especially if the 2019 fractal repeats.
BTC/USD 1-day and 12-hour chart
A complete invalidation of this bearish outlook could occur if BTC manages to overcome the $71,150 resistance level and turn it into a support floor. Such a move could see BTC challenge the all-time high of $73,794 and set a new one at $80,000.