Bitcoin Price Bounces Back Following Steady Interest Rates Decision by the US Fed
Summary:
Following the U.S Federal Reserve's decision to keep interest rates steady, Bitcoin saw an increase in its price. Market analyst Fejau indicated that the Federal Open Market Committee (FOMC) announcement boosted risk appetite and asset values. Bitcoin's price began to rally after the FOMC decision, increasing over 3% and trading at $59,077. Factors such as short-term holder market value to realized value and transaction loss versus profit ratio suggest possible indications of Bitcoin's recovery following the recent dip.
On May 2nd, Bitcoin (BTC) saw a resurgence in its price after the US Federal Reserve chose to keep interest rates steady, quelling speculators' anticipation of rate cuts for 2024. The Federal Open Market Committee (FOMC) issued a statement on May 1, confirming that the interest rates would remain within the 5.25%-5.50% range. They added that a more robust confirmation of inflation moving consistently toward 2% would be required before contemplating any rate cuts. The Fed is also looking to decrease its balance-sheet cutbacks, also known as quantitative tightening (QT), from $60 billion monthly to a meager $25 billion. The FOMC stated: “Starting in June, the Committee will lessen the rate of reduction of its security holdings by lowering the monthly redemption limit on Treasury securities from $60 billion to $25 billion.” A market analyst and active user, Fejau, points out that the FOMC announcement presented a paradoxical stance, articulating dovish sentiments regarding balance sheet matters while taking a hawkish approach about rate cuts. Nevertheless, the decision of FOMC rendered a boost to risk appetite and asset values as BTC prices began to see recovery moments after the announcement, posting over a 3% increase in the past 24 hours and trading at $59,077 at report time. BTC reached as high as $59,482 on May 2, making the market observers question if the falling trend has come to an end. There have been discussions likening the recent fall in BTC price to the events following the 2016 halving. Rekt Capital, a well-known trader and market commentator, suggests that BTC is mimicking a similar pattern. He claimed the deviation is already at -6% and might not drop further or for an extended period before the cryptocurrency eventually hits rock bottom. Insights from On-chain metrics propose valuable perspectives on BTC recovery after its decline to $57,000. An important measure presented by Santiment, the Short-Term Holder Market Value to Realized Value (STH MVRV), currently stands at -6%. It essentially compares the present trading price of BTC (the market value) to the average price when the coins underwent the last transaction (realized value). The market research firm suggests that markets rebound most robustly when MVRV remains within the negative scope. The BTC transaction in profit versus loss ratio also indicates a potential rebound in the market. The figures provided by Santiment suggest the current movement of BTC at a loss outweighs the transactions at profit. It often signifies market bottoming out, attributed to mass investors offloading their holdings.
Published At
5/2/2024 9:05:28 PM
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