The Bitcoin price continues to record new yearly highs as the cryptocurrency goes on a bullish rampage. There is no resistance level capable of containing BTC bulls, while macroeconomic uncertainty and a banking crisis fuel the fire.
As of this writing, Bitcoin trades above the critical level of $28,500 and is pushing upwards. Today’s U.S. Federal Reserve (Fed) Open Market Committee (FOMC) is bound to bring volatility. The ongoing crisis in the country has investors sitting on the edge, and this event could provide clarity for BTC and other assets.
Bitcoin Investors’ Sentiment Shifted, But Caution Prevails
According to crypto market analyst firm Blofin, the price of Bitcoin is rising while traders await the FOMC decision around interest rates. As NewsBTC reported yesterday, any cute in interest rate hike could hurt the current BTC rally.
If the Fed cuts, the institution sends a message that could be interpreted as fear. If it rises rates, the market could translate this into confidence. Either result seems negative for the financial institution as the former might increase the crisis, while the latter could spike inflation.
In that sense, the Fed should operate under a “Business as usual” and raise rates by 25 basis points (bps). If so, the market might calm, and BTC could reclaim higher levels. In the meantime, the number one crypto by market cap is bound to dominate over other digital assets. Blofin wrote:
BTC is now trading at above $28.5k amid the uncertainty of the FOMC’s interest rates decision. Due to the improvement of sentiment in the risk assets, the performance of BTC is significantly better than ETH for the time being, which is reflected in the ETH/BTC trading pair.
Blofin notes a decrease in Implied Volatility for at-the-money (ATM) contracts in the crypto options sector. In other words, investors expect BTC’s rally to slow down sometime in the coming days.
In this sector, crypto investors show a neutral bullish bias, but Blofin noted, “risk aversion is also rising.” Today’s FOMC decision could have a long-lasting impact on these investors’ perceptions.
However, there is a high chance that the Fed will stay the course or come out dovish to mitigate fear in the market. As long as this attitude does not translate into a rate cut, BTC will likely trend upward for the short term.
4/6. From the perspective of skewness, considering that the Federal Reserve is likely to show a dovish attitude at the March FOMC meeting, most investors still maintain a neutral to bullish attitude. pic.twitter.com/SH7s5vIW9h
— Blofin Academy (@Blofin_Academy) March 22, 2023
BTC/USDT chart from Trandingview