Bitcoin Targets $30,000 Price Level Following Fed’s Announcement
In the early hours of May 4, Bitcoin (BTC) surged to $29,000, buoyed by the looming threat of another US banking crisis, which could potentially result in new casualties. This comes after the United States Federal Reserve reportedly raised the interest rate by 25 basis points.
Investors Flock To Gold And Bitcoin For Stability
According to on-chain data analytics, BTC experienced a rapid shift in price action, surging to $29,242 on the Bitstamp trading exchange. Before the Federal Reserve’s announcement regarding interest rates, the BTC/USD trading pair had fallen to its daily low at the start of the previous day’s Wall Street session.
Simultaneously, regional bank stocks in the US continued their decline, even as the Fed announced the highly anticipated 0.25% increase in interest rates. Amid reports of a potential buyout by PacWest Bancorp, the regional banking sector remained under pressure, causing investors to turn to safe-haven assets such as Bitcoin.
With market experts criticizing the Fed’s strategy and anticipating the cessation of interest rate hikes, the price of gold surged to unprecedented levels. Meanwhile, Michael van de Poppe, CEO and founder of trading firm Eight, expressed his disbelief at Fed Chairman Jerome Powell’s statement that the banking system is healthy, sound, and resilient, calling it “the biggest joke.”
According to him, the banking system is, in fact, weaker than ever, and recent events have only served to reinforce this perception. Van de Poppe argued against the remarks made by Federal Reserve Chairman Jerome Powell about the current state of the regional banking industry during the interest rate announcement.
He said the US banking system is stable and robust and has demonstrated marked improvements since March. Like Van de Poppe, other top industry players were far from impressed with Powell’s remarks.
Former BitMEX CEO Arthur Hayes disclosed that he was actively seeking out struggling regional banks. He also indicated that the subsequent actions of either Powell or Treasury Secretary Janet Yellen could affect the direction of the markets.
Many analysts opined that the market has yet to reach a point that will trigger Powell or Yellen to wade in and bail out all the affected banks. According to financial analyst Tedtalksmacro, the Federal Reserve funds rate has reached the expected peak predicted by its members.
However, Material Indicators, a monitoring resource for the financial markets, observed changes in the Binance order book, revealing that large-scale whale buying activity had increased following the recent events. Given this development, market participants are now optimistic that additional liquidity squeezes may occur, potentially driving the price of Bitcoin above the critical $30,000 barrier.
No Impact On Crypto Yet
Yesterday’s Federal Reserve interest rate decision was one of the most significant in recent history. Nevertheless, the Fed still needs to find the optimal balance between implementing the right monetary policy decision and communicating it remains a daunting task for the central bank.
Ahead of the Fed’s announcement, the interest rate hike had largely been factored into market expectations. Nonetheless, market participants were anticipating that the next press conference would have a significant impact on the prices of digital assets.
But this failed to happen as the US dollar remained relatively stable, and this stability was reflected in the cryptocurrency market, where prices traded within a narrow range. For example, Bitcoin has exhibited a relatively low level of volatility compared to other assets in the industry, and its price remains near the levels observed in early April.
The lack of movement in the market can be partially attributed to Powell’s clear communication during the press conference, which left little room for uncertainty regarding the central bank’s plans. Thus, there was no cause for doubt among bullish and bearish investors, and attention has now turned to the upcoming jobs report scheduled for Friday.
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