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After consolidating above $22.600, Bitcoin has now broken its $23k resistance level after the US Federal Reserve announced the start of the disinflationary process of the US economy, raising the interest rate by another 25 base points. This acknowledgement has also led to the broader financial market to rise in the face of such dovish remarks.
According to Coingecko, Bitcoin rose 3.2% in the last 24 hours as the announcement of the rate hike hits the markets. However, the central bank is still not optimistic about their future moves this year with Federal Reserve chairman James Powell eyeing more rate hikes in the near future.
At a press conference, Powell indicated that the Fed may be winding down its rate hikes because of the slowdown in inflation.
“We can now say I think for the first time,” he said, “that the disinflationary process has started.”
Overly Optimistic Market?
The 25 bps hike comes after last month’s December Consumer Price Index report which shows a downward trend in CPI since the Fed’s aggressive quantitative easing measures last year. However, at 6.5%, it is still higher than the central bank’s target inflation rate of 2%.
But the acknowledgement that this is the start of the US economy’s disinflationary process has given confidence to the financial market. Major indices like the NASDAQ have climbed despite the increase in interest.
The uptick in both crypto and stocks might be the market being overly optimistic. With the United State’s current interest rate at 4.75%, it is the highest since October 2007 which is a few months before the crippling 2008 financial crisis. However, this second smaller scale rate hike is evidence that the Fed is somewhat dovish about the future of the economy.
At $23.8K, When Will Bitcoin Break Past $24k Resistance?
At the time of writing, the alpha coin is trading at $23,828 after being rejected at $24k earlier today. However, this brief break of the $24k resistance offers a glimpse of a bullish future for Bitcoin. With the Fed being slightly dovish and the broader financial market being optimistic, BTC might be able to break through this resistance at a shorter time frame.
Investors and traders should be able to enjoy a bullish medium to long term, targeting $24k resistance. If the bulls are successful in breaking through $24k resistance, $28k can be targeted with ease.
However, with the macroeconomics holding a strong sway in the movement of Bitcoin, investors and traders would benefit in monitoring the macro situation as better macros could boost BTC prices.
For now, investors can be comfortable holding Bitcoin for medium and long term gains. But BTC bulls should exercise caution as Powell suggested that the country will enter a recession no matter what.
Feature image by Verdict
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