Why bitcoin and other crypto assets are expected to consolidate after the Fed meeting?

It’s quite a fact now that markets, either traditional stock markets or crypto markets, are quite dependent on the approaches and actions of authorities

Most markets, in general, seem to be driven by the actions of governments and financial authorities within the country. Since the Crypto market is global, its movement more or less depends on the same factors. For instance, last year, crypto assets have traded increasingly, such as equities; the monetary policy made the outstanding performance of the crypto market of the Central Bank of the US one of its more important drivers. 

However, opposite to the experienced trend, crypto analysts and traders are not expecting the same market shaking moves after the policy-making meeting of the Federal Reserves on Wednesday. This is largely because the market has assumed a rate hike for a month of approx 50 basis points. Still, if Fed Chair Jerome Powell has more hawkish turns than expected, there could be significant movements in crypto prices, while a more aggressive approach could lower the crypto. 

Senior Market Analyst at Oanda, Edward Moya, said that there had been a falling momentum seen around crypto from retail and institutional interest since the beginning of this year. Further analysts said that bitcoin and other risky assets are likely to consolidate more until the point comes where markets show more confidence in reaching the peak of Fed hawkishness. 

One of the crypto traders with GSR, John Kramer, has no anticipation that bitcoin could break its trading range of 30 days. Still, he’s watching the comments about the inevitable balance sheet runoff of Federal reserves. Until March, the Central Bank was buying US Treasury and securities backed by agency mortgages to help the financial markets get a boost.  

Bitcoin has traded for the past month within a range of $37,000 to $46,000, that is on Wednesday afternoon, trading at $38,982, which is down by almost 44% from its all-time high. While adding the expectations to see a relief rally in intraday trading, Kramer said that it would be shocking to see if the sustainability of the crypto market drops by the closing of the stock market on Wednesday. In the longer term, at $28,000 and $30,000 levels, bitcoin has strong buyer support. From there, it would have to take more of an eerie approach which would be a significant change to shake people out than those levels. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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