Key Points
- The Federal Reserve’s recent policy meeting and Jerome Powell’s stance have had an impact on Bitcoin’s price movement.
- Bitcoin’s second quarter might differ significantly from its performance in the first quarter of 2024.
The recent policy meeting held by the Federal Reserve has sparked a range of reactions. Jerome Powell’s hint that a ‘rate hike’ is not likely to be the central bank’s next move was of particular interest.
Bitcoin [BTC] and the cryptocurrency market were among the sectors that felt the impact of this. After the Fed’s announcement, BTC briefly surged to $58K, only to drop quickly again, suggesting strong selling pressure.
Bitcoin’s Market Sentiment
Joe McCann, Founder, CEO, and CIO of Asymmetric, spoke about this on a recent episode of “Unchained”. He said, “Employment data is actually the most important thing for determining if and when, the Fed will have coverage to actually start cutting rates.”
McCann also spoke about Bitcoin’s potential bottom and reversal in market sentiment, especially regarding risk assets and the U.S. dollar. He said, “The day of the FED, Bitcoin finally cracked 59k and saw a brutal wash out. I think that there’s probably a good chance based on what happened with the price action, which is a more or less reversal in risk.”
However, BTC has since been trying to reach its all-time high again. At the time of writing, the cryptocurrency was trading at $62,372, up 1.5% in the last 24 hours.
Bitcoin’s Second Quarter
This implies that Bitcoin’s second quarter might not be as successful as it was in the first quarter of 2024. Alex Kruger shared this sentiment, saying, “This signals very, very effectively and clearly that he’s not concerned with inflation the way some people in the market want him to be.”
Contrarily, QCP, a Singapore-based institutional crypto-trading firm, stated that the U.S Fed and QRA were “more dovish than expected.” They noted, “At FOMC, Powell said that the Fed is not looking to hike rates and announced the slowing of Quantitative Tightening (QT) from $60bn monthly to $25bn. For QRA, the Treasury will keep issuances for longer maturities unchanged, reducing fears of a spike in longer-term yields. This should help push down the USD rally, which is positive for risk assets.”
In 2023, Bitcoin was affected by events such as those involving Israel, Iran, and economic reports. However, Kruger pointed out that Bitcoin has shown independence from such events recently. He stated, “If you think that there is a ‘fed put’ this is very good because it means equities won’t collapse therefore the probability of Bitcoin actually doing its own thing and imploding 80% becomes very dim.”
