March FOMC On Watch

Bitcoin prices are on watch today ahead of the March FOMC. The futures market has been drifting higher again this week, before we saw some selling interest take hold into the week’s highs yesterday. A softer US Dollar has helped lift BTC sentiment and but with hawkish Fed risks seen into today’s rates meeting, the market is vulnerable to a fresh drop lower if we see any aggressive USD upside on the back of the meeting. The Fed is widely expected to hold rates unchanged but focus will be on the updated dot-plot projections and forward guidance.

Bearish BTC Risks

Given the soaring energy prices we’ve seen in response to the Iran war, and subsequent inflation fears, the risk is that the Fed turns more hawkish today creating fresh upside pressure under USD. Traders have dramatically slashed their easing expectations this year from initially expecting a cut in June and one further cut later in the year, to now just one cut later in the year. If the Fed delivers a hawkish meeting today, rate cut expectations could vanish this year entirely. In this scenario, BTC should see fresh downside as risk markets react and USD tracks higher.

Bullish BTC Risks

However, if the Fed strikes a more neutral tone today than markets are expecting, this could see USD cooling further near-term, allowing BTC to push higher. In particular, if a rate cut is still projected later in the year or if Powell is heard warning over residual downside risks from the jobs market, this could help spur a broader BTC recovery near-term.

Technical Views

BTC

For now, BTC remains above the $69,605 level but still within the bear channel and capped by the $80,185 resistance. While this marker holds above, risks of a fresh breakdown are seen with $53,030 the next bear-target to note. If we break the channel highs, however, this will signal the start of a broader bullish recovery with $94,450 the next objective for bulls.