The Fed’s next cryptocurrency market agenda has quieted down somewhat, but bitcoin prices are gearing up for a major breakout. At least that is the general market sentiment, with investors expecting increased volatility on the BTC front in the coming days. But for now, the king cryptocurrency is holding above $22,500.
Bitcoin (BTC) Technical Analysis
The golden cross or intersection formed on the charts is very high on the agenda of the cryptocurrency community these days. The opinion shared by expert analyst Glenn C. Williams is very important, let’s take a look.
For those unfamiliar with charting techniques, this happens when the moving average (usually 50-day) crosses the long-term average (usually 200-day). Technical analysts see the move as a bullish indicator for the market. However, investors are asking themselves “what happened or will happen?” This will trigger a sharp price recovery in the short term. He should ask.
When you look at the history of Bitcoin, you can see how infrequently this golden cross has happened. Since January 1, 2015, there have only been six occasions when the 50-day exponential moving average (EMA) moved above the 200-day EMA. With Ethereum, this rarely happens. After experiencing the previous 50-day/200-day golden cross, BTC continued to rise by 4.4% in the next 7 days and 9.6% in 30 days. What is BTC doing on average across all 7-day and 30-day periods? We see the gold crosses faring worse than their closest relatives, up 1.6% and 7.5% respectively. In fact, when these moving averages cross, we do see prices actually rise above their past averages despite no improvement in fundamentals.
The best 30-day return was when BTC rose 67% after the April 2019 and May 2019 golden cross. The worst period was an 18.2% loss in May and June 2018. In conclusion, based on historical data, the upcoming golden cross is likely to bring about a price increase. The Fed announces that the deflationary process has begun, or the upcoming Optimism inflation data on February 14, or a different development. The obvious reasons for this rise are expected to become clear in the future. For now, investors appear to be relatively reassured, as BTC dominance is on a downward trend and it is widely believed that BTC will continue to rise in the medium term.
Where are cryptocurrencies headed?
BTC has surged more than 40% in the past month, and Bitcoin isn’t the only thing seeing price increases. Shares of Tesla (TSLA) are up nearly 100% from their lows a month ago. So what does market expert Todd Groth think of this?
“Markets seem to have returned to a bullish 2021-style mindset as the Fed slows its pace of hikes. The front end of the U.S. yield curve shows that. Look at the difference in yield between 6-month and 12-month T-bills; Digesting a rate cut from the Fed in the third or fourth quarter of this year. The fact that the long-term returns are higher than the short-term returns made me make that observation.”
“Investors interpreted Chairman Jerome Powell’s relatively balanced comments after last week’s FOMC meeting rose just 25 basis points as a sign that the central bank will soon slow its efforts to curb inflation , “which in turn suggests that buying in the market is going to happen. He’s going crazy again. “
Jeffrey Gundlach, chief investment officer at Doubleline Capital, said the Fed has historically set policy rates by lagging the two-year Treasury yield. With the two-year Treasury yield above the effective fed funds rate, we believe this leading indicator of future rate expectations warrants a rate cut. But the real question is the urgency and timing of any cuts. So how close is it now?
Gross said:
“When we examine the last two upcycles, we can see that the two-year yield was below the fed funds rate for one year in the 2016-2019 cycle and two years in the 2004-2008 cycle Both periods suggest that the market is pricing in higher interest rates over six months Inflation expectations (derived from US Treasuries, including inflation-linked TIPS) are retreating from peaks in 2021-2022, but remain higher than 2008 financial Post-crisis average. This is good news, but since the Fed itself has a large share of the TIPS market (25% in 2022, according to Jim Bianco estimates), we should take a closer look at what this indicator is signaling. Published on Friday The surprisingly strong jobs report combined with ongoing concerns about the validity of the Phillips curve has created significant uncertainty that could force the Fed to wait and see before cutting rates to minimize the chance of a policy error.”
In other words, the Fed will further maintain its cautious stance before cutting interest rates. Therefore, an early rally period for crypto is unlikely. We are approaching the peak of Fed tightening, but it is unclear how long we will be at this summit. The economy looks resilient and morale so far, but the temperament of inflation remains.
Information source: compiled from COIN-TURK by 0x information.Copyright belongs to the author Fatih Uçar, without permission, may not be reproduced