Bitcoin Price Prediction: Fed’s Stance, ETF Approval, & Yuan’s Impact on BTC
Bitcoin (BTC), the world’s largest cryptocurrency, experienced a dip on Friday as it failed to maintain its upward momentum and dropped below $27,000.
Jerome Powell’s statement about possible interest rate hikes caused a 1.5% decrease in the global crypto market to $1.06 trillion.
Bitcoin has been trading sideways due to Powell’s statements and the increase in 10-year note yields.
The Federal Reserve’s comments triggered a sell-off in various markets, including the crypto market.
The crypto fear and greed index has dropped by 4 points to 43/100, indicating fear among investors.
Bitcoin Price Falls as Federal Reserve Takes Hawkish Position
On the other hand, the optimistic outlook for the US Dollar, attributed to the Federal Reserve’s hawkish stance, is exerting additional pressure on Bitcoin’s price.
It’s widely recognized that the Fed recently opted to maintain interest rates at a 22-year peak, set within the 5.25% to 5.50% range, a move that aligned with expectations.
In their official release, the Fed alluded to the potential of one more rate hike by year’s end, driven by ongoing inflation concerns.
Moreover, policymakers forecast the benchmark rate to hover around 5.1% next year, implying only two rate cuts in 2024—down from the four initially projected.
Consequently, the Federal Reserve’s hawkish position, combined with potential interest rate increases and a bolstered US Dollar, has influenced Bitcoin’s price negatively.
Given this context, investors might perceive the Dollar as a more appealing asset relative to Bitcoin, potentially leading to decreased demand for cryptocurrencies and a corresponding dip in Bitcoin’s value.
Bitcoin ETF Approval Could Propel Bitcoin’s Value
Despite the challenges in the broader economic landscape, Bitcoin has the potential to gain solid ground through the continuous pursuit of spot Bitcoin exchange-traded funds (ETFs) in the United States.
It is worth noting that there is almost a 70% chance that the Securities and Exchange Commission (SEC) will approve these ETFs within the next six months.
This approval can act as a significant catalyst, potentially driving Bitcoin’s price up by around 20%.
Although the financial world is facing some difficulties, the ongoing efforts to introduce Bitcoin ETFs in the US could really help Bitcoin gain traction.
The news of potential SEC approval for Bitcoin ETFs carries the potential to significantly boost Bitcoin’s price, indicating growing institutional interest and legitimizing Bitcoin as a mainstream investment.
This, in turn, is likely to attract more capital into the cryptocurrency market, thus driving up its value.
Bitcoin Gains Popularity as Chinese Yuan Continues to Depreciate
Bitcoin (BTC) may receive significant investments from China in the coming months, as the Chinese yuan weakens and capital flight from the country reaches a seven-year high. Chinese investors could turn to Bitcoin as a familiar and accessible option during this time.
However, the yuan’s decline is due to the sluggish economy compared to the strong US economy.
Experts predict that due to the absence of growth in local companies and ongoing pressure on the yuan, investors may look for opportunities beyond China, and cryptocurrency could be one of the few viable options.
This trend could potentially boost Bitcoin, but strict capital controls still pose a challenge.
Bitcoin Price Prediction
Upon evaluating the technical dynamics, Bitcoin is navigating through heightened volatility, having breached the pivotal support set at $26,600.
This threshold had once served as a resistance barrier. However, subsequent candle confirmations, especially on the 4-hour chart, have reinforced its stature as a formidable support for Bitcoin.
After breaking below $26,650, Bitcoin approaches its immediate support at $26,300.
On the 4-hour chart, it’s now below the 50-day exponential moving average and has exited an ascending channel. If the decline persists, Bitcoin might target $25,511.
Conversely, surpassing $27,000 could propel it to $27,500. The $27,000 mark, emphasized by the 50-day average, is pivotal for Bitcoin’s direction.
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