Key Points
- Bitcoin (BTC) reclaimed $105K following the Fed’s decision to pause interest rates.
- Key short-term levels to observe for Bitcoin are $108K, $110K, and $97.5K.
Bitcoin (BTC) showed a moderate reaction following the recent Federal Reserve rate decision, pushing its value back over $105K. On January 29th, the Fed maintained interest rates between 4.25% and 4.5%, citing high inflation as the reason for this pause.
Bitcoin Responds to Inflation Concerns
Despite the Fed’s ‘hawkish’ stance, Jerome Powell, the Chair, did not express excessive bearish sentiments during the press conference. He even suggested the possibility of reducing rates even if the 2% inflation target is not achieved.
The market had anticipated this rate pause. The mixed signals from Powell’s press conference kept Bitcoin within the short-term range of $100K-$105K.
President Donald Trump disagreed with the Fed’s decision to pause rates and criticized Powell. He proposed to control U.S. inflation by increasing energy production to lower the prices of goods.
The market’s attention will now shift to key inflation data and the Fed’s preferred PCE (Personal Consumption Expenditures) price index, which is scheduled for release on January 31st.
Impact of U.S. Inflation Report on Bitcoin
Matt Mena, a crypto strategist at 21Shares, shared his insights on how the PCE price index report could affect Bitcoin. He stated that while the Fed’s decision did not significantly impact the market, investors are waiting for confirmation that rate cuts are imminent.
Until then, Bitcoin is likely to consolidate within its current range, with $105K as the key breakout level and $108K as the next major upside target if Friday’s data favors risk assets.
Mena’s forecast aligns with Coinglass’s 2-week liquidation heatmap chart. In most instances, high liquidity pockets serve as price magnets. If a liquidity sweep occurs, Bitcoin could target the immediate liquidity levels (bright yellow) at $108K and $110K.
However, if the inflation data reflects a bearish sentiment, Bitcoin could be pulled towards the lower liquidity pocket at $97.5K.
