Here Are Two Scenarios For Bitcoin A Month Prior To FED Announcing Possible Interest Rate Hike
16 Fevereiro 2022 - 3:00PM
NEWSBTC
Bitcoin was rejected once more as it approached the mid area around
its current levels. The first crypto by market cap has been
trending to the upside over the past week but has been unable to
break above critical resistance. Related Reading | TA: Ethereum
Eyes Key Upside Break, $3K Holds The Key As of press time, BTC’s
price trades at $43,691 with a 1.1% loss in the last 24 hours. One
month from now, on March 17th, the U.S. Federal Reserve is expected
to possible announced a shift in its monetary policy and to begin
its tapering process on their asset purchasing program. In
addition, the financial institution could announce a hike in
interest rates. The possible shift in monetary policy has been
contributing with the global markets current trend to the downside
as investors attempt to price-in the FED’s future action. Bitcoin
has been impacted by this risk-off environment, but a lot of
uncertainty surrounds the crypto market. Director of Global Macro
for investment firm Fidelity, Jurrien Timmer, recently presented
two scenarios that the markets could follow as the FED prepares to
increase interest rates. In the first of these scenarios, the
market “tightens on its own” to “tame” inflation, as Timmer said,
with a potential top in 2023 of 2% in interest rate hikes
incremented at 25 bps or 0.25% starting next march. This could be
the most bullish scenario for Bitcoin and the rest of the global
market. The U.S. financial institution could operate with a passive
approach, and not force the financial sectors to enter a massive
selloff. The second scenario seems more aggressive, according to
Timmer: The ongoing inflation news will force the Fed to tighten so
many times that it eventually “breaks” something, which will in
turn force it to pivot much like it did in 2018 after a 20%
sell-off in equities. The Best Moment To Buy The Bitcoin Dip?
Fidelity’s Director of Macro seems optimistic, at least at the
moment. Timmer believes the inflation narrative hasn’t force the
FED to take extreme measures, so interest rates could top at around
2% which could be the less painful path for Bitcoin and the global
financial sector. Timmer compared the current macro-economic
situation with the tightening cycle of 1994. During this
period, the market wasn’t expecting the FED to hike interest rates
and was also surprised when the institution stopped its tightening
program. Time will tell if this cycle will be similar. On the other
hand, Jarvis Lab’s Ben Lilly believes there is room for a Bitcoin
rally before the FED turn full-on hawkish. Lilly presented two
previous scenarios, 2004 and 2015, when the financial institution
was about to increase interest rates. Related Reading | TA: Bitcoin
Fails to Test $45K, Why Dips Could Be Attractive As seen below, in
2004, the Nasdaq index trended higher before a sell-off which, as
Lilly said, was a good opportunity to buy the dip. Bitcoin and
other cryptocurrencies could follow the same pattern as the market
enter a “soft period” on higher rates expectation. Lilly said:
Market went soft in anticipation of higher rates. Do we go bullish
until the actual hike takes place in mid-March? Then once the hike
happens, and market sells off, will it be the best BTD (Buy the
Dip) opportuniry for next couple years?
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