The Bitcoin price is struggling currently after coming out of a turbulent weekend. Most of the digital asset’s reaction has been toward the FOMC meeting that will hold on May 2-3, at the end of which the CPI data will be released. As has been the case with the previous FOMC meetings, the price of Bitcoin has recoiled as investors await the Fed’s announcement.
Bitcoin Underperforms Ahead Of FOMC Meeting
Bitcoin saw a rocky start to the week as the digital asset’s price fell to the $27,000 level once more. There has been some recovery since then but it has not been significant by any stretch. Furthermore, bulls are having a hard time holding on to the support at $28,000 with this being a seller’s market. As a result, BTC is now looking toward support at a much lower level.
A lot of the muted sentiment has been in response to the FOMC meeting. Expectations for the latest CPI data release vary but crypto participants will benefit more if inflation were to come in lower. This is because lower inflation rates breed higher risk tolerance, hence, risk assets such as Bitcoin tend to enjoy a lot of support during such times.
However, if the Fed were to return to a hawkish stance as they did in 2022, then it could be very bad for the market. Lower inflation rates actually lead the Fed to be more dovish, as has been the case in the first quarter of 2023, which was very favorable for Bitcoin and cryptocurrencies in general.
Another interest rate hike is expected, however, it depends on how much the hike is. A 25 bps hike would be favorable for risk assets, but crossing the 50 bps mark will likely lead to a dump in the market.
BTC Weakens For The First Time In 2023
The start of 2023 saw Bitcoin move very strongly and peak at almost 100% higher than the value at which it started the year. However, most of the euphoria triggered by the mini-bull run has since worn off and investors who bought at the cycle lows took profit from the market.BTC weakens ahead of FOMC meeting | Source: BTCUSD on TradingView.com
Since BTC’s local peak was above $31,000, it has slowly weakened over time. Its current price of just above $27,000 puts the digital asset below its 20-day moving average, indicating bearishness, especially in the short term.
However, the weakness has not impacted the long-term bull case for BTC as it is still well above its 100-day and 200-day moving averages. Both of these show that investors are preferring to wait for higher prices over the long term rather than chase short-term profits.
Bitcoin’s performance for the rest of the week will be largely dependent on the FOMC announcement. As usual, the market is expected to be extremely volatile in the hours leading up to the announcement. But where the price lands will depend on the Fed’s decision.Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet… Featured image from iStock, chart from TradingView.com