The upcoming Federal Open Market Committee (FOMC) meeting on Wednesday has investors grappling as investors eagerly await insights from the Federal Reserve on inflation dynamics, seeking clarity on the likelihood and pace of a return to the central bank’s targeted 2% rate.
What Happened: Bitcoin BTC/USD has been trading within a range of $29,000 to $31,500 for the past two months, with occasional blips.
Addressing the current FOMC event, crypto analyst Michael Van de Poppe in an email told Benzinga, “This is the first one where we could expect a positive outcome" for major cryptocurrencies like Bitcoin, Ethereum ETH/USD.
Van de Poppe observes a decline in the crypto market ahead of the meeting. "Crypto-minded people are usually feared going into events like this, and that’s why you can see that markets are dropping."
The analyst said should inflation continue to decline, especially in conjunction with influential reports like the Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE), expectations of further rate hikes may diminish, resulting in falling yields. In such a scenario, Van de Poppe believes Bitcoin could experience a breakout to the upside, particularly if Chairman Powell affirms a halt to additional rate increases.
When asked about price targets for BTC, ETH, Van de Poppe said, “I would expect up and then we break the range towards new highs.”
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Why It Matters: This week brings several key economic indicators that will provide insights into the current state of the economy. On Tuesday, the Conference Board will unveil its latest Consumer Confidence Index (CCI), gauging public sentiment towards the economy.
On Thursday, reports on jobless claims will give us a glimpse of the latest data on economic growth. Finally, on Friday, the release of the PCE will shed light on inflation trends, an important measure for the Federal Reserve. The PCE data could either support or challenge the central bank’s recent decisions and direction.
Edward Moya, Market Analyst at OANDA, mentioned in a note shared with Benzinga that Bitcoin’s trading patterns have been characterized by consolidation, with price action increasingly leaning towards the lower boundaries as volatility diminishes.
"It will take a fresh catalyst to excite Bitcoin traders and right now it seems the price action is destined for a broadening formation, potentially targeting the $27,500 and $31,500 zone," he added.
Analysts at Zoksh Pay, a crypto payments solution, pointed out that historical data shows cryptocurrencies, especially Bitcoin, react to FOMC actions. "Post the central bank’s crisis interventions in early 2020, Bitcoin and U.S. stocks have displayed correlated movements, heightening the linkage between cryptocurrencies and traditional assets," the analysts told Benzinga, adding that a similar pattern could be observed after Wednesday’s session as well.
Price Action: At the time of writing, BTC was trading at $29,196.87, up 0.1% in the last 24 hours, according to Benzinga Pro.
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