Bitcoin (BTC) price continues to flash mixed signals, raising uncertainty among investors and negatively impacting asset prices across the market.
Data from Cointelegraph Markets Pro and TradingView shows BTC price pinned below $36,000 and even though crypto and equities markets underwent a brief relief rally on Jan. 26, comments from the recent FOMC meeting appear to be settling in as investors internalize the fact that interest rate hikes are on the way.
BTC/USDT 1-day chart. Source: TradingView
Here’s a look at what analysts and traders are saying about Bitcoin's most recent price action and the macroeconomic factors impacting the wider crypto market.
A year of "range bound" trading
The long-term range-bound trading that BTC has been in since early 2021 was addressed by Mike McGlone, senior commodity strategist for Bloomberg Intelligence, who posted the following chart and asked, “What ends Bitcoin, Ethereum range trade?
BTC/USD 1-week chart. Source: Twitter
According to McGlone, the key to escaping the current range are the “bullish fundamentals” that back the underlying strength of Bitcoin.
“By the rules of economics, a market with rising demand and declining supply will go up over time, suggesting that Bitcoin may be forming a bottom again around $30,000 as $60,000 resistance ages.”
The Fed continues to add downside risks
A deeper analysis on the impact of Jan. 26’s Federal Reserve meeting was provided by Bilal Hafeez, CEO and head of research at Macro Hive, who noted that the tone of the meeting “turned out to be more hawkish than expected.”
Hafeez pointed to the decision by the Fed to raise the inflation forecast as a sign that the central bank has realized that “they need to be more hawkish than before,” and he highlighted Powell’s comments that “this cycle would be different to the last cycle, which suggests faster hikes than before.”
With that being said, Hafeez indicated that the Fed “has not decided on a path yet,” and noted that Powell “didn’t give much additional information on quantitative tightening except that it would operate in the background.”
“Overall, the Fed is comfortable with equity and risk markets selling off as it tightens financial conditions and so could reduce inflation. Bond yields have risen after the meetings, equity and crypto markets have given back gains. The Fed continues to add downside risks to risky markets.”
Related: Derivatives data suggests that Bitcoin’s $39K bounce was a mere blip
Short-term weakness, long-term strength
The near-term outlook for BTC was briefly touched upon by derivatives traders and pseudonymous Twitter user Crypto McKenna, who posted the following chart and stated that “BTC price action is about to get very boring.”
BTC/USD 6-hour chart. Source: Twitter
“No trade season for the next 10–20 days in my opinion.”
Despite this projection for near-term weakness and sideways price action, the long-term outlook continues to brighten for multiple reasons, as noted in the following Tweet from crypto analyst Will Clemente.
Bitcoin price weakness because of risk-off behavior while fundamentals strengthening: Intel creating mining chips, Russia looking to get involved in mining, Goldman Sachs bullish, Google partnership w/ Coinbase, El Salvador Bond.
Hard to think asymmetry is to the downside.
— Will Clemente (@WClementeIII) January 27, 2022
The overall cryptocurrency market cap now stands at $1.663 trillion and Bitcoin’s dominance rate is 41.5%.
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