Bitcoin Price Risks Falling to $21,000, US Fed Rate Hike Isn’t The Reason
Bitcoin price enjoyed a 40% rally in January, turning the crypto market bullish. The positive sentiment among traders caused the crypto market to recover over a $1 trillion market cap. Traders await the U.S. Federal Reserve rate hike decision and Chair Jerome Powell’s outlook on the economy to decide their trades for the next few weeks.
Bitcoin price continues to trade near the $23,000 level as bulls and bears fight to maintain their dominance ahead of the Fed policy decision. The 24-hour low and high for Bitcoin are $22,884 and $23,225, respectively.
Bitcoin Price Risks Turning Bearish Again
According to on-chain analysis, the circulating supply of stablecoins is decreasing in the crypto market. Stablecoins can be described as the liquidity of the crypto market.
In 2020, a massive increase in the supply of stablecoins resulted in a bullish crypto market. However, the supply of stablecoins dwindled since February 2022, causing a bear market that ended the journey for many crypto companies such as crypto exchange FTX.
In January 2023, a short-term increase in the circulating supply of stablecoins led to a 40% rise in the Bitcoin price. However, a death cross between stablecoins circulating supply of MA 21 and MA 100 is likely to happen again. It will cause the Bitcoin price to fall.
If the circulating supply of stablecoins does not increase further, the crypto market will enter a bear market again. It will impact investor sentiment massively.
Also Read: Wall Street Estimates On US Federal Reserve Rate Hike Decision
U.S. Fed Rate Hike Decision
The U.S. Fed raised interest rate by 425 bps last year, with four consecutive 75 bps rate hikes and a 50 bps rate hike in December. The market expects a further slowdown in rate hike to 25 bps due to cooling inflation, strong jobs data, and an increase in the U.S. GDP growth rate at 2.9% in the fourth quarter.
According to CME FedWatch Tool, there’s a 99.3% probability of a 25 bps rate hike by the U.S. Fed rate hike. The U.S. Dollar Index (DXY) shows increased volatility ahead of the Fed policy decision, risks fall in Bitcoin price.
Christopher J. Waller, a member of the Federal Reserve Board of Governors, asserts the Fed needs six months of data, not three months of positive data to consider a pivot. Thus, the Fed is likely to pause the rate hike before their May 2-3 meeting.
Also Read: US Fed Meet News Live Updates: Bitcoin (BTC) To Reach 25K or 21K?
- USDH Launch Boosts Hyperliquid Amid Competitive Market Pressure
- SEC to Decide on Six Spot XRP ETF Applications in October
- Ripple Partners with Ondo Finance to Tokenize U.S. Treasuries on XRPL
- Ethereum Exchange Supply Drops 52% as $3,700 Liquidation Risk Grows
- XRP News: mXRP Vault Surpasses $22M as Investors Capitalize on Staking Rewards
- Pepe Coin Price Bounce Likely as Support Zone Aligns With Rising Social Activity
- Solana Price Set for Recovery Amid Wyckoff Accumulation and Canary Capital ETF Filing
- Avalanche Price Could Surge to $50 as Transactions Jump 200%
- CHMPZ Price Prediction:Will This Net-Zero Community Token be the Next Gem?
- Ethereum (ETH) Price Set for a rebound as Whales Accumulate $1.6B ETH and Outflows Hit $622M
- HYPE Price Prediction As Bitwise Files For Hyperliquid ETF – Is $55 In Sight?
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
