bitcoin's price remained under pressure on February 1, hours after the US Federal Reserve (Fed) held interest rates steady on January 31. The fall of the world's most valuable cryptocurrency is unexpected.
Recent data suggests that analysts expect the central bank to slash interest rates from their multi-year high, which will likely boost bitcoin.
Pain for bitcoin in the short term
In a follow-up analysis following this decision, Alex Krueger, crypto analyst and economist, believes that bitcoin prices will likely fluctuate in the short term, but will recover in the long term as the Federal Reserve begins to reduce interest rates. .
Related Reading: Bullish Golden Cross Forms on Altcoins Chart, crypto Analyst Expects Big Moves
Taking X on February 1, the analyst argument that the Federal Reserve's decision to keep rates stable was a “hawkish” measure aimed at moderating market expectations. However, Krueger maintained that the Federal Reserve's overall stance is dovish and that interest rate cuts will likely materialize in May or June.
The analyst also acknowledged that the market is currently “considering too many rate cuts for 2024.” Despite the recent drop, the analyst believes that bitcoin prices will likely continue to correct rapidly before recovering sharply in the coming weeks and months.
Krueger compared the current Fed policy environment to the situation in 2022. The analyst then noted that many in the crypto scene believed the rate cuts were too bearish for bitcoin.
In the article on Several market observers believe this is not the case, quoting gradual reduction of inflation data.
Beyond this, the economist noted that the Federal Reserve has gotten back on track after two years. Analysts interpret this “sale” as a commitment by the US central bank to provide liquidity and support to financial markets if necessary. Between 2020 and 2021, the Federal Reserve employed loose monetary policy, pumping trillions of dollars into the economy while also signaling its willingness to support banks.
Will btc surpass $50,000?
As things stand, bitcoin prices remain in an uptrend, looking at the technical layout of the candles on the daily chart. Although the coin is nowhere near December 2023 highs and is under pressure on writing, buyers have the upper hand.
The immediate support level is around $39,500, recorded in January 2024. If the upward trend resumes, triggered by macroeconomic developments, including inflation in the United States and the strength of its labor market, prices must exceed $50,000.
Featured image from Canva, TradingView chart