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Fed Signals Likely Pause
Bitcoin is trading higher today on the back of the May FOMC yesterday but hasn’t quite seen the breakout move that many were hoping for. The Fed was seen hiking rates by a further .25%, as expected along with announcing a move to a data dependent stance on any further rate adjustments. Notably, the bank removed the language around the need for further tightening, suggesting the likelihood that the Fed will now be on pause. However, Powell was keen to push back against calls for rate cuts in the near future saying that while inflation remains high, rates will need to stay high also.
Recent Developments Being Monitored
In the statement issued alongside the rate decision, the Fed said that it would be assessing the impact of its recent monetary policy tightening as well as the recent economic and financial developments. The recent banking sector crisis has become a central argument for those calling for rate cuts going forward. In light of the failure of First Republic over the weekend and the news that Pac West is now looking at strategic options, it looks likely that the Fed will hold rates unchanged next month.
Upside Risks for Crypto
In the press conference following the meeting, Powell was heard sounding alarmed over recent banking sector issues. Powell noted that the speed of the run on SVB was unprecedented and called for an investigation and greater oversight and regulatory action going forward. While Powell is pushing back against rate cuts for now, should the baking crisis flare up again this is likely to shift moving forward, creating room for a breakout in Bitcoin and other crypto assets.
Technical Views
BTC
For now, BTC is sitting within a holding pattern (contracting triangle) just atop the 28110 level. With momentum studies climbing off lows, the focus is on an eventual break higher while current support holds, targeting a challenge of the 32185 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.