Bitcoin price witnessed a marvelous 40% rally in January as traders expect a turnaround of events. The BTC price hit a high of $23,282 last week, marking a 5-month high despite the FTX contagion that continues to impact the market sentiment.
Bitcoin price currently trades at $22.8K, trading sideways in the last two days. The 24-hour low and high for Bitcoin are $22,387 and $23,056, respectively. While analysts expect Bitcoin price to hit $25k this month, the rally may not happen.
Also Read: Bitcoin (BTC) Price To Hit $25K or $21K, What’s Next?
Here are the reasons why the Bitcoin rally is likely over and the BTC price may not hit $25k this month.
The European Central Bank plans to deliver 50 bps interest rate hikes in the next two meetings in February and March. ECB President Christine Lagarde asserts the need for further tightening and revising rate hike targets to bring down inflation.
Meanwhile, the European Parliament’s Economic Affairs Committee votes on a draft law seeking banks offering crypto services to hold more capital to manage risks from crypto assets.
The U.S. Federal Reserve to announce a rate hike in the next FOMC meeting on February 1. While the CPI and jobs data signal a smaller rate hike, economists expect another 50 bps rate hike. Invests may have to wait a little longer for the Fed pivot.
As per CME FedWatch Tool, the probability of a 25 bps rate hike is 97.2%. The reading has decreased from the last day as investors await the fourth-quarter GDP data due on Thursday.
Bitcoin price stabilizes below $23k ahead of the ECB and U.S. Fed rate hike decision. Thus, traders are unlikely to take any decision before these events.
The U.S. dollar index (DXY) will continue to show volatility ahead of the importance week. The DXY currently moves below 102 and is likely to jump higher ahead of the rate hike decision by the U.S. Federal Reserve.
A rise in DXY will make the Bitcoin price to dive lower and bring a correction in the broader crypto market. Moreover, the recent policy decision by Japan and European Union have weakened the US dollar and the Fed will most likely thwart it.
Bitcoin Fear and Greed Index is neutral at 50. The index has dropped in the last few days as traders anticipate a decline in Bitcoin price due to possibilities of profit-taking and “sell the news” strategy.
While the BTC price is in an early bull market, traders are unlikely to trade in the current market conditions.
Bitcoin price is trading above the 200-day moving average (DMA). Analysts expect a move to 200-WMA, which is near $25k.
In the daily timeframe, Bollinger Bands breakout to subdue in the coming days and Bitcoin price can fall below $21,500. Moreover, the RSI is moving in the overbought zone and is likely to fall lower. Other indicators also signal a decline in Bitcoin price.
Also Read: Here’s When Bitcoin Bull Market Cycle Starts
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