Will the Fed stop rate hikes? 5 things to know in Bitcoin this week
Bitcoin (BTC) starts a new week in an unmistakably bullish position as it passes $28,000.
Crypto markets continue to climb on the back of the banking crisis, which still rages in the United States and abroad — where will they go next?
After a week of chaos for macro markets and solid gains as a result, Bitcoin and altcoins are circling levels, which some have not seen for nine months.
The 2022 bear market is feeling like an increasingly distant memory as old resistance levels tumble and bulls attempt to cement newly-reclaimed support.
This week, as last, there are all sorts of potential hurdles to overcome — the Federal Reserve will decide on its next interest rate changes and new macroeconomic data will drop.
Markets will likely stay volatile as a result, and any further unexpected events from the banking sector will only add to the instability.
At the same time, Bitcoin’s own ecosystem is set to become stronger than ever as network fundamentals launch to fresh all-time highs.
Cointelegraph takes a look at five of the key phenomena to keep an eye on when it comes to BTC price action in the coming week.
Fed rate hike cycle in doubt
The macro event of the week is undeniably the March 22 Fed decision on interest rate hikes — or lack of them.
The Federal Open Market Committee (FOMC) faces a stark challenge to its current quantitative tightening (QT) policy in place for the past eighteen months.
The unfolding banking crisis has put into doubt the Fed’s ability to keep raising interest rates, a policy which commentators argue was the death knell for struggling regional banks.
The Fed is nonetheless caught between a rock and a hard place. Raising rates would keep inflation in check but further punish the economy, possibly unleashing a new wave of bank failures.
“Next week’s FOMC is gearing up to be one of the most interesting ones in a while, with no one really agreeing on what’s gonna happen,” engineer and trader Tree of Alpha summarized.
“Odds at leaning towards 25bps, but it’s a wildcard. Planning on longing <=0bps and shorting >=50 bps as the safe play.”
According to CME Group’s FedWatch Tool, consensus as of March 20 favored the Fed hiking by 25 basis points, rather than pausing hikes altogether. The week prior, Goldman Sachs had predicted that rates would plateau, while Nomura even forecast a rate cut.
“This week, the long anticipated March Fed interest rate decision comes out. Currently, markets are pricing in a 62% chance of a 25 bps rate hike. However, markets also see 100 bps of rate cuts by December,” financial commentary resource, The Kobeissi Letter, wrote in part of analysis about the long-term rate hike roadmap.
Kobeissi and others also queried how struggling bank stocks would react at the next Wall Street open, given the latest government moves over the weekend.
These included a buyout of Credit Suisse, the European banking giant, which saw a particularly violent reaction to the U.S. meltdown.
“Credit Suisse, $CS, was worth $10 billion a month ago and sold for pennies on the Dollar,” Kobeissi continued about fellow bank UBS purchasing Credit Suisse and getting $100 billion in government liquidity.
“The government said $CS had ‘serious risk of bankruptcy.’ A shareholder vote was bypassed. Regulators knew it was a matter of hours for bankruptcy. This deal was made out of desperation.”
Bitcoin spot price eyes $30,000
With that, the mood on Bitcoin and crypto markets has understandably taken a fresh turn for the better as the week begins.
At the time of writing, BTC/USD traded above $28,400, according to data from Cointelegraph Markets Pro and TradingView.
Already at nine-month highs, the pair managed to beat out bears during a consolidation period last week to return to target levels not seen in almost a year.
Chief among these is $30,000, a psychologically significant level surrounded by considerable historical liquidity. For monitoring resource Material Indicators and others, meanwhile, a key support level to hold is the 200-week moving average (MA).
#FireCharts shows $30M in #BTC bid liquidity consolidated and moved down to defend the 200-Week MA. This is a KEY LEVEL for bulls looking for full candle bodies above the 200 WMA to call it a bull breakout. If the W candle closes below it, hope of a confirmation next week is lost pic.twitter.com/0doqQWchTQ
— Material Indicators (@MI_Algos) March 19, 2023
Popular trader Crypto Tony focused on $27,700 to support the bull case and potential for an attack on $30,000.
“$27,700 ensured we are now in the next range between $27,700 – $31,000. Using $27,700 as a level that bulls need to hold to sustain a move up to $30,000 level,” he tweeted.
“Interesting week for sure. My stop loss on my main long remains at $25,500.”
In fresh analysis, meanwhile, fellow trader Crypto Chase highlighted $28,500 as a potential short entry, while also entertaining a “somewhat likely” bull case in which selling only kicks in above $33,000.
“Please note that I am not abandoning the idea of 28.5K~ shorts. These may still present a great opportunity around FOMC this Wednesday. At the moment though, I cannot imagine an immediate local top,” he explained.
“I think a rejection could occur there and I’ll still look for the trade, but for those who attempt to hold a 28.5K short back to 12K may end up stopped out in that 33K liquidity pool.”
Analyst heralds end of bear market
For some analyzing the long-term picture, however, Bitcoin has already broken out of a bear market in place since the comedown from its all-time highs and the start of Fed tightening in late 2021.
The weekly close came in at just above $28,000, making it Bitcoin’s highest since early June, 2022.
For trader, analyst and podcast host Scott Melker, known as “The Wolf of All Streets,” this has clear implications.
“The bear market is officially over,” he proclaimed on the basis of the weekly chart data.
“$BTC made it’s first higher high ($25,212) since the all time high . That confirms a new bullish trend. Price can still go down, but that would be a new trend, not a continuation of the previous bear market. Congrats everyone.”
Melker linked to a similar post from August 2019, just after BTC/USD had passed $13,000 in a comeback from the pit of its previous bear market.
Equally buoyant about weekly timeframes is trader and analyst Rekt Capital, who continues to eye a disintegration of Bitcoin’s “macro downtrend.”
Mission Complete#BTC finally challenges the Macro Downtrend again and breaks out from the Macro Range and breaks the Macro Downtrend$BTC #Crypto #Bitcoin pic.twitter.com/m90xhW3QM6
— Rekt Capital (@rektcapital) March 19, 2023
On quarterly timeframes, Rekt Capital is monitoring a “bullish engulfing” event in the making, something which has triggered significant upside in and of itself in the past.
New all-time highs due for Bitcoin difficulty
In a classic move, Bitcoin’s network fundamentals are refusing to abandon their trip to the moon.
The latest estimates from BTC.com and MiningPoolStats show that both hash rate and difficulty are in “up only” mode this month.
Difficulty is set to adjust upwards 3.26% in the coming days, making it almost 45 trillion.
Hash rate hit a local peak on March 13, but is now trending upwards once again as miners respond to the latest price action.
Bitcoin hash rate just casually reaching new all-time highs week after week pic.twitter.com/bYIpO0puvs
— Will Clemente (@WClementeIII) March 18, 2023
Among miners, however, a divergence is playing out. On a rolling 30-day basis, miners’ BTC balances continue to decline, according to data from on-chain analytics firm Glassnode.
The most greed since Bitcoin price was $69,000
There may still be reason to be afraid of the current bullish surge in Bitcoin and crypto more broadly.
Related: Bitcoin levels to watch as BTC price eyes highest weekly close in 9 months
A look at sentiment data suggests that the majority of the market is becoming overly confident in the good times continuing.
The Crypto Fear & Greed Index, which uses a basket of factors to produce a normalized sentiment score for crypto, is now at 66/100, firmly in its “greed” zone and its highest since November 2021.
Its warnings are being corroborated by social media users. A survey from research firm Santiment, which has garnered almost 15,000 responses, shows that most believe that BTC/USD will break $30,000 as the next major crypto market event.
“Crowd bullishness is doubling up bearishness for crypto’s top 2 assets,” Santiment commented about the results.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.