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Bitcoin is only at the very beginning of a new era. The era of high rates of the Fed and other central banks.

Relevance up to 03:00 2022-03-28 UTC–4

On the 4-hour TF, bitcoin overcame the upper boundary of the triangle, then adjusted to the level of $ 40,746, bounced off it, and eventually rose to the upper boundary of the side channel of $ 45,408. Now we are waiting for a test of this level. If the attempt to overcome it turns out to be successful, then we should expect a new growth of $ 48,682 and $ 51,350 cryptocurrencies. Otherwise, a new round of decline, at least to the level of $ 40,746.

The Fed will tighten monetary policy throughout the current year.

As we said earlier, the Fed’s plan to tighten monetary policy is very unprofitable for bitcoin. The more expensive the borrowing costs, the higher the investor demand for safe assets will be. However, at the same time, inflation remains high around the world, and bitcoin has been used as a means of hedging inflation in the last year. Thus, a classic “double-edged sword” is obtained. On the one hand, the fundamental background remains negative, on the other – bitcoin may be in demand because not every instrument can give such profitability. However, bitcoin has not been particularly profitable in the last six months, since it was mostly adjusted at that time. Nevertheless, the belief in its eternal growth still does not leave the minds of many traders and investors.

As for the Fed. So far, the Fed has raised the key rate only 1 time. That is, you should not even expect a special effect on inflation. The bank said that the neutral rate level is at 2.4%. A neutral level is a level at which no significant pressure is created on the economy with the help of monetary policy. Thus, the Fed can almost painlessly raise the rate to 2.5%, without fear of cooling the economy. But inflation, in this case, may, at least, stop its growth. In this case, the demand for bitcoin will decrease due to a drop in the probability of further acceleration of the consumer price index.

Also, in almost any case, with an increase in the rate, the demand for cryptocurrencies will decrease, as the profitability of safe assets, such as bank deposits or bonds, will increase. Therefore, from our point of view, the fundamental background will continue to deteriorate throughout the current year. And if this is the case, and the participants of the cryptocurrency market will not ignore this factor, firmly believing that bitcoin will always grow in any case, then bitcoin will be under pressure. That is, you can forget about updating the cost maximums in 2022.

In the 4-hour timeframe, the quotes of the “bitcoin” came out of the triangle and continued to grow with a target of $ 45,408. There are simply no other landmarks other than this level right now. The instrument is located in the side channel in the long term, so it can move in any direction inside it. A rebound from the $ 45,408 level is highly likely to provoke a new fall. Overcoming – further growth with a target of $ 48,682.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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