In short: The Federal Reserve raised the Federal Funds Rate by 25 basis points to 5.50%, but it had little impact on the cryptocurrency market, including Bitcoin. The Fed signaled that achieving its 2% inflation target will take time and it will take a data-dependent approach to future rate hikes. Despite the rate increase, the Fed may raise rates again in September depending on data. The markets reacted positively to the Fed's decision, with Bitcoin and US equities rising. Bitcoin may experience a rebound soon based on technical indicators.
Our quick analysis:
The recent decision by the Federal Reserve to increase the Federal Funds Rate (FFR) by 25 basis points to 5.50% has created little ripples in the cryptocurrency market. In fact, renowned journalist Ted Talks Macro even described the event as "very vanilla." While some investors were hoping for a more aggressive approach from the Fed, it seems that the central bank is adopting a cautious stance, indicating a long road to achieving its 2% inflation target and taking a data-dependent approach to future rate hikes.
According to Ted, the full impact of this tightening is yet to be felt, and the path back to the inflation target might require below-average growth and softening in the labor market. Despite the rate increase, there is still a possibility of another hike in September, depending on the data.
In addition to raising rates, the Fed's decision to leave Quantitative Tightening (QT) unchanged shows their measured approach to monetary policy. This cautious approach from the central bank has been seen as an indication that they are mindful of the potential impact of their actions on the broader economy.
Interestingly, the markets responded positively to the Fed's decision. Both Bitcoin and US equities showed upward movement. Many investors perceive this event as a signal that the Fed is inching closer to a pause button on rate hikes, which could bode well for risk assets in the near future.
Speaking of Bitcoin, there's more good news for the bulls in the crypto market. After the announcement of the rate increase, data analysis firm Material Indicators observed that a significant sell wall at the $29,400 level has vanished. This development potentially allows Bitcoin to breach the zone and reclaim higher price levels. However, the cryptocurrency's 50-day Moving Average (MA) poses a short-term obstacle, sitting above the current price. Overcoming this hurdle is essential for a sustained uptrend.
But fear not, Bitcoin bulls! The cryptocurrency's Average Directional Index (ADX) has experienced a considerable drop and is approaching the neutral level. Historical trends show that such decreases in ADX tend to be followed by robust upward movements. This hints at a potential rebound for Bitcoin, raising hopes of crossing the $30,000 mark once again. Additionally, regaining the 50-day MA as a support level, a feat achieved before the recent decline, could further solidify Bitcoin's positive momentum.
In conclusion, while the Fed's rate hike didn't cause any dramatic waves in the cryptocurrency market, it symbolizes the central bank's cautious approach and concern for the broader economy. Meanwhile, Bitcoin bulls seem to have caught a break with the disappearance of a significant sell wall, setting the stage for a potential rebound. As always, investors and traders should keep a close eye on technical indicators and market trends to make informed decisions in this evolving landscape.
Note: The article sources information from various reputable and undisclosed sources, ensuring a comprehensive analysis without relying on a single platform.
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Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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