Bitcoin (BTC) prices recovered on May 2 after the U.S. Federal Reserve (Fed) decided to keep interest rates on hold, dampening investor hopes of a rate cut in 2024.
The Federal Reserve said in Federal Open Market Committee (FOMC) minutes released on May 1 that it would keep interest rates at 5.25% to 5.50%, adding that it needed “greater confidence that inflation will continue to move toward 2%” before cutting rates. He added that it was necessary.
The Fed also announced plans to slow the pace of balance sheet contraction (QT) from $60 billion per month to $25 billion per month.
“Starting in June, the Committee will reduce the monthly redemption limit on Treasury securities from $60 billion to $25 billion to slow the decline in security holdings.”
Fejau, a market analyst and
Nonetheless, the FOMC decision appears to have increased risk appetite and asset prices. BTC prices began to rebound within minutes of the news breaking, trading at $59,077 at the time of the announcement, up more than 3% in the past 24 hours.
The price of Bitcoin rose as high as $59,482 on May 2, leaving market participants wondering if the downward trend was over.
Bitcoin price is repeating the 2016 cycle.
The recent price drop left Bitcoin down 6.7% from its halving price, hitting its lowest level in two months.
In a recent commentary on BTC’s price action, popular trader and analyst Rekt Capital said that the cryptocurrency has followed a similar trend since the Bitcoin halving in 2016.
“Bitcoin has once again repeated history from 2016 this cycle, recently declining below the lower limit of its current re-earning range.”
After the halving in 2026, the ‘refunding range’ lasted for up to three weeks, with a ‘further adjustment’ of up to 17%.
“This deviation is -6% to date,” Rekt Capital added. This suggests that BTC prices may fall further as the standard cycle phenomenon continues.
How much deeper? He pointed out:
“The answer is no deeper and no longer will it last until Bitcoin finally bottoms.”
Bitcoin Price Rebound Supported by “Crowd Surrender”
A closer look at on-chain indicators provides important insight into Bitcoin’s recovery from its drop to $57,000.
An important metric to consider is the STH MVRV (Short Holders Market Value to Realized Value) ratio. According to data from Santiment, this rate is currently -6%.
This ratio essentially compares the current price at which Bitcoin is trading (market value) to the average price the coin last moved at (realized value).
Markets bounce back most effectively when the MVRV ratio is in the negative range, according to the market intelligence firm.
Another indicator of the likelihood of a market rebound in the near term is comparing the number of profitable and losing trades.
The chart below from Santiment shows that the percentage of BTC being moved at a loss is higher than the percentage of trades being moved at a profit.
“This often correlates well with the floor because it is a key sign of crowd surrender.”
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.