Bitcoin prices remained under pressure on February 1, hours after the U.S. Federal Reserve left interest rates steady on January 31. The decline of the world’s most valuable cryptocurrency is unexpected.
Recent data suggests analysts expect central banks to significantly cut interest rates from multi-year highs, boosting Bitcoin.
Bitcoin’s pain in the short term
In a follow-up analysis following this decision, cryptocurrency analyst and economist Alex Krueger believes that while Bitcoin prices will fluctuate in the short term, they will recover in the long term once the Federal Reserve starts lowering interest rates.
Related Reading: Bullish Golden Cross Forms on Altcoins Chart, Crypto Analyst Expects Big Move
The analyst chose X on February 1st. assert The Fed’s decision to keep interest rates steady was a “hawkish” move aimed at tempering market expectations. But Krueger said the Fed’s overall stance was dovish and that a rate cut was likely to occur in May or June.
The analyst also acknowledged that the market is currently “pricing in too much of a rate cut in 2024.” Despite the recent plunge, analysts believe the Bitcoin price will continue to correct rapidly before a sharp rebound in the coming weeks and months.
Kruger contrasted the current Fed policy environment with what it will be like in 2022. The analyst then pointed out that many in the cryptocurrency industry believe the interest rate cut is too bearish for Bitcoin.
In a post on Although several market observers believe this is not true, Quotation Tapering inflation data.
In addition to this, the economist pointed out that the Fed’s ‘put’ will begin again in two years. Analysts interpret the “put” as a promise from the U.S. central bank to provide liquidity and support to financial markets if needed. From 2020 to 2021, the Federal Reserve has shown that it is prepared to use loose monetary policy to inject trillions of dollars into the economy while supporting banks.
Will BTC break above $50,000?
As it stands, Bitcoin price remains in an upward trend, judging by the array of technical candles on the daily chart. The coin is not close to its December 2023 high and is under pressure at the time of writing, but buyers have the upper hand.
Immediate support levels are around $39,500, recorded in January 2024. Macro events, including inflation in the US and strength in the labor market, would require the price to break above $50,000 for the uptrend to resume.
Featured image from Canva, chart from TradingView