Bitcoin Price Risks Falling to $21,000, US Fed Rate Hike Isn’t The Reason

Bitcoin price benefited from a rally of 40% in January, turning the crypto market upside down. The positive sentiment among traders caused the crypto market to recover over a $1 trillion market cap. Traders await the U.S. Federal Reserve rate hike decision and Chair Jerome Powell’s outlook on the economy to decide their trades for the next few weeks.

Bitcoin continued trading prices near the $23,000 level that bulls and bears are struggling to maintain their dominance in front of the federal policy decision. The low and high 24hrs for bitcoin are $22,884 and $23,225, respectively.

Bitcoin Price Risks Turning Bearish Again

According to on-chain analysis, the circulating supply of stablecoins is decreasing in the crypto market. Stableassets may be described as the liquidity of the crypto marketplace.

In 2020, a massive increase in stability supply led to an upward crypto market. However, the supply of stablecoins dwindled since February 2022, causing a bear market that ended the journey for many crypto companies such as crypto exchange

In January 2023, a short-term increase in the circulating supply of stablecoins led to a 40% rise in the Bitcoin price. However, a crossing of deaths between stablecoins circulating from the supply of ma 21 and ma 100 may recur. This will bring down the price of bitcoin.

If the supply of commodities in circulation does not rise further, the crypto market will again enter a bear market. This will have a significant effect on investor sentiment.

Also ReadWall Street Estimates On US Federal Reserve Rate Hike Decision

U.S. Fed Rate Hike Decision

The U.S. Federal Reserve raised the interest rate by 425 bps last year, with four back-to-back 75 bps increases and a 50 bps increase in December. The market expects rates to rise again to 25 basis points as inflation slows, robust employment data, and a 2.9% increase in U.S. GDP growth in Q4.

According to CME FedWatch Tool, there’s a 99.3% probability of a 25 bps rate hike by the U.S. Fed rate hike. The index of the American dollar (dxy) shows increased volatility before the political decision of the Fed, risks decrease in the price of bitcoin.

Christopher j. waller, a member of the Governing Council of the Federal Reserve, says the Fed needs six months of data, not three months of positive data to consider a pivot. Thus, the Fed is likely to pause the rate hike before their May 2-3 meeting.

Also ReadUS Fed Meet Live News Updates: Bitcoin (CTB) to hit 25,000 or 21,000?