BTC Shows Signs of Over Optimism, Can Bitcoin Fight the Fed?

Bitcoin and the wider cryptocurrency market had an excellent beginning in 2023 with the BTC price jump of 40% last month. The expanded marketplace added $280 billion to the crypto marketplace in one month.

However, with the new month of February around the corner, investors must remain cautiously optimistic. The great test that awaits us will be the next political decision of the Federal Reserve.

The past month has seen an upswing in asset classes like cryptography, stocks, and bonds above the Fed's expectations of falling interest rate hikes and eventually reducing as inflation cools. Later today, on February 1, it is anticipated that the Federal Reserve will announce a 25 basis point increase in interest rates.

However, Fed President Jerome Powell has already insisted that the policy will remain restrictive in the face of price mitigation. If so, he might be pouring cold water into the $250 billion crypto runup last month.

Bitcoin is going to fight Fed?

With Bitcoin already giving a strong runup at the beginning of 2023, we can't expect the same dynamic to support given the general conditions of the market. In his note, Vetle Lunde, senior analyst at Arcane Research,

The crypto “market is overly optimistic regarding a swift Fed pivot. The slowdown in dynamics, high technical resistance and expectations of a firm FOMC" indicate a "bad February."

Arcane Research of the continuation of the study on the decision of Bitcoin around fed briefings, notes that the "trend of massive volatility induced by the FOMC in BTC is declining". However, some market analysts also believe that the worst of the crypto crisis after the ftx crash might be behind us.

Apart from digital assets, crypto stocks also rebounded strongly last month. The shares of the crypto exchange currency based on us (nasdaq: coin) have increased by 65%. Similarly, the index of Bitcoin-mining equities also jumped by 77% during the last month. We may see gains this month.