Key Points
- Bitcoin’s [BTC] bounce back to $85K is linked to the Fed’s slower pace of quantitative tightening (QT).
- Technical price indicators were yet to show sustained BTC price recovery at the time of writing.
Fed’s Dovish Tilt on QT Linked to BTC Bounce
On the 19th of March, Bitcoin [BTC] regained its $85K mark, a development that analysts have associated with the Federal Reserve’s slow rate of quantitative tightening (QT).
Crypto options trading desk, QCP Capital, regarded the dovish shift in QT as an ‘indirect interest rate cut.’ In their daily market review, QCP Capital noted the Fed’s decision to scale back QT starting in April as the catalyst that pushed BTC past $85K.
Jamie Coutts, chief crypto analyst at Real Vision, stated that the QT taper would boost US dollar liquidity, which is extremely liquidity-positive.
What’s Next for Bitcoin?
The dovish shift in QT was expected by some analysts, and the focus now is on the next move for BTC and whether the relief bounce can sustain a reversal of recent losses.
Arthur Hayes, founder of BitMEX and CIO at Maelstrom crypto fund, suggested that BTC might have reached its lowest point at $77K following the Fed’s move. However, he also warned of potential downside risk for stocks.
From a price analysis standpoint, BTC reclaimed key moving averages on the lower timeframes, indicating a bullish shift. However, pseudonymous crypto trader, Income Sharks, cautioned that a stronger conviction would be the OBV (On Balance Volume) clearing its overhead resistance.
If OBV weakens after rejection at the resistance level, BTC’s recovery could be capped. Conversely, if volume increases at current levels, BTC’s recovery could be strengthened.
QCP Capital also noted that Options market sentiment has turned positive, but whether this bullish skew is sustained depends on the next few days of trading.
