Forex Analysis & Reviews: 20.03.2023 - Fed meeting. Will it affect...

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20.03.2023 11:54 PM

Fed meeting. Will it affect Bitcoin's winning ways?

On the 4-hour chart, the picture is even more eloquent. Bitcoin has risen sharply over the past 10 days and managed to overcome the $25,211 level quite easily. Of course, it was not without the help of the "black swan", but we have what we have. Now it can continue to rise with $29,750 as the target.

The Federal Reserve will meet this week. Traders have no particular intrigue, since the probability of a 0.25 bps rate hike is at least 90%. However, this was not always the case. Since the last Fed meeting, market expectations for the rate have changed several times. First, after Fed Chairman Jerome Powell's speech in the US Congress, the market increased its expectations for the rate to rise by 0.50 bps in March. Then, after the news about the collapse of three banks in the US, it lowered them to 0. And later it decided that the banking crisis could not be more important for the central bank than high inflation, so the rate would most likely increase by 0.25%. We agree with this forecast, which means that the market has already included this decision into the current prices of all instruments. Therefore, we believe that the Fed's decision to tighten monetary policy once again will not drastically affect the Bitcoin rate.

We can expect the crypto market to react only if the Fed surprises everyone by raising the rate by 0.5% or refuses to do so. But obviously it is impossible to foresee such a surprise in advance, because that's why it's a surprise in the first place. Take note that the crypto market is no longer impressed by the fact that the Fed continues to tighten monetary policy. The banking crisis came first. If earlier, high rates forced investors to withdraw funds from risky assets and place them in safe ones with high returns for them, now the opposite is true. The fall in confidence in the banking system makes investors look for other investments so that money does not depreciate under the influence of high inflation. And one of these tools is Bitcoin. Once again we have a "situational growth", which is simply provoked by a panic in the markets and the redirection of capital from one to another. Fundamentally, Bitcoin had no reason to rise in price, and there is no reason at all.

On the 4-hour chart, Bitcoin began a new round of upward movement, and I mentioned that it's better to open long positions when the quote has surpassed $25,211. So now it is possible to stay in long positions with $29,750 as the target. If Bitcoin breaks through this level, you can open new longs with $34,267 as the target. Selling on a bullish trend is irrelevant, but with a rebound from $29,750, you can open small shorts while aiming for $2-3,000 lower.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.