Bitcoin once again was rejected as it approached its mid-range levels. Although the market capitalization of the first cryptocurrency has trended to the upside in the last week, it has not been able to overcome critical resistance.
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As of press time, BTC’s price trades at $43,691 with a 1.1% loss in the last 24 hours.
In one month, March 17thThIt is possible that the U.S. Federal Reserve will announce a shift of monetary policy. They also plan to start tapering its asset purchase program. The financial institution may also announce an increase in interest rates.
The possible shift in monetary policy has been contributing with the global markets current trend to the downside as investors attempt to price-in the FED’s future action. Although Bitcoin is affected by the risk-off climate, there are still many uncertainties surrounding crypto markets.
Jurrien Turner, Director, Global Macro, Fidelity’s investment company, has recently been promoted presentedTwo scenarios could be followed by the market as the FED increases interest rates.
In the first of these scenarios, the market “tightens on its own” to “tame” inflation, as Timmer said, with a potential top in 2023 of 2% in interest rate hikes incremented at 25 bps or 0.25% starting next march. This is the best scenario for Bitcoin, and all of the global market.
It is possible for the U.S. to operate in a passive manner and not require financial sector collapse. Timmer believes that the second scenario would be more aggressive.
The ongoing inflation news will force the Fed to tighten so many times that it eventually “breaks” something, which will in turn force it to pivot much like it did in 2018 after a 20% sell-off in equities.
What is the Best Time to Buy Bitcoin Dips?
Fidelity’s Director of Macro seems optimistic, at least at the moment. Timmer believes the inflation narrative hasn’t force the FED to take extreme measures, so interest rates could top at around 2% which could be the less painful path for Bitcoin and the global financial sector.
Timmer said that the current macroeconomic state is similar to the tightening period of 1994. During this period, the market wasn’t expecting the FED to hike interest rates and was also surprised when the institution stopped its tightening program. The future will show if it will repeat.
On the other hand, Jarvis Lab’s Ben Lilly believesThere is still room to rally Bitcoin before the FED becomes hawkish. Lilly also presented scenarios in 2004 and 2015. These were when interest rates had been about to rise.
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The trend of the Nasdaq index in 2004 was higher than the sell-off. Lilly explained that this is a great time to invest in the dip. Bitcoin and other cryptocurrencies could follow the same pattern as the market enter a “soft period” on higher rates expectation. Lilly stated:
In anticipation of rising rates, the market went soft. Are we bullish or bearish when the hike actually takes place? Will it then be the best BTD opportunity (Buy the Dip), for the next few years, once the hike takes place?
