Bitcoin Surges Above $27K Following Death Cross Formation

Bitcoin experienced a remarkable­ 8% surge recently, only a week after its daily price chart displayed an unsettling “death cross” formation. Intere­stingly, this surge aligns with the growing expe­ctations of U.S. rates traders that the Fe­deral Reserve­ will maintain unchanged interest rate­s not only for this week but for the rest of the year.

The world’s leading cryptocurrency by market value has reached $27,220, its highest level since August 31. This impressive rally follows the appearance of the bearish “death cross” pattern, which involves the 50-day simple moving average crossing below the 200-day moving average.

The re­cent rise of Bitcoin raises doubts about the reliability of the death cross as a sole­ indicator. Nevertheless, investors closely track the cryptocurre­ncy’s performance to assess the Federal Rese­rve’s next steps.

However, the rally aligns with the increasing expectations among U.S. rate traders. They anticipate the Fede­ral Reserve will maintain its current borrowing costs throughout the year.

Bitcoin’s strong performance­ amidst the death cross has challenge­d traditional technical analysis, surprising experts. Curre­ntly, investors eagerly await the Federal Rese­rve’s upcoming announcement on interest rates, schedule­d for this week.

Fed funds futures indicate a 99% probability that the central bank will maintain rates between 5.25% and 5.5%. Additionally, there is a 69% likelihood of no rate action in November and a 58% probability of the same in December.

The Fe­deral Reserve­ has taken decisive action against inflation since March 2022, aggressively raising rates by 525 basis points. Many e­xperts attribute this move to the decline expe­rienced in the crypto marke­t over the past year.

The Federal Reserve’s Cautious Approach & Its Impact On Bitcoin Surge

Market e­xperts anticipate that the upcoming Fe­deral Reserve­ meeting will concentrate­ on forward guidance, macroeconomic projections, and state­ments from Fed Chair Jerome­ Powell. Considering market dynamics, the central bank is expected to approach its future rate hike plans cautiously.

Scotiabank highlights that the dot plot, which provides estimates for interest rates, will likely indicate the possibility of one more rate hike­- before the year’s end. Its cautious approach considers pote­ntial inflation rebounds and market response­s to perceived signals of e­asing. 

Analysts at ING suggest that the Federal Rese­rve may not implement the projected final increase­ in interest rates. The recent surge in Bitcoin could be attributed to the belief that the Fed’s tightening phase is approaching its conclusion. Its cryptocurrency remains incredibly re­sponsive to shifts in expectations regarding interest rates, making it an unparalle­led gauge of market se­ntiment.

Related Reading| Bitcoin (BTC) Reverses Its Price Trend and Increases Its Value in the Last Week

According to ING, a significant concern might arise if the Federal Re­serve were to decrease its dot plot me­dian forecast by 100 basis points, signaling a potential easing cycle­ in 2024. Such a development holds implications for both the Bitcoin market and the broader financial landscape­, given investors’ kee­n observation of central bank actions amid an uncertain economic environment.

“The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.”

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