Bitcoin ‘gives back gains’ after Fed comments ‘add downside risks’ to crypto markets

The Bitcoin (BTC), price is still showing mixed signals. This raises uncertainty and negatively impacts asset prices.

Data from TradingView and Cointelegraph Markets Pro shows that BTC prices are below $36,000. Even though there was a short relief rally on Jan 26, crypto and equities markets experienced a temporary recovery as investors began to accept the possibility of interest rate increases.

BTC/USDT 1-day chart. Source: TradingView

Here are some thoughts from traders and analysts about Bitcoin’s recent price action, and other macroeconomic factors that impact the wider crypto market.

Year of “range bound trading”

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, addressed the long-term trading range that BTC is in since early 2021. He posted this chart and asked: “What end Bitcoin, Ethereum range trade?”

BTC/USD 1-week chart. Source: Twitter

McGlone says that the key to breaking out of the current range is the “bullish fundamentals”, which back Bitcoin’s underlying strength.

McGlone stated,

According to economic rules, a market that has rising demand and decreasing supply will go up over the long-term. This suggests that Bitcoin could be reaching a bottom around $30,000 or $60,000 as resistance ages.

The Fed continues to increase downside risks

Bilal Hafeez (CEO and head of research at Macro Hive), provided a deeper analysis of the impact of January 26’s Federal Reserve meeting. He noted that the meeting’s tone was “more hawkish” than anticipated.

Hafeez cited the Fed’s decision to increase the inflation forecast as an indication that they have realized that “they need be more hawkish that before” and he referred to Powell’s comment that “this cycle would differ from the last,” which suggested faster hikes.

Hafeez stated that the Fed had not yet decided on a course of action and that Powell didn’t provide much information about quantitative tightening other than that it would be done in the background.

Hafeez said,

“Overall, the Fed is happy with risk and equity markets selling off as it tightens its financial conditions. This could help reduce inflation. After the meetings, bond yields rose while equity and crypto markets saw gains. The Fed continues to increase downside risks in risky markets.

Related: The derivatives data suggests that Bitcoin’s $39K bounce wasn’t a fluke

Long-term strength, short-term weakness

Crypto McKenna (a pseudonymous Twitter user) briefly discussed the near-term outlook of Bitcoin. He posted the following chart, and said that “BTC price actions are about to become very boring.”

BTC/USD 6-hour chart. Source: Twitter

McKenna said,

“No trade season in the next 10-20 business days, my opinion.”

Despite the near-term weakness projection and sideways price action, long-term prospects continue to improve for multiple reasons. Will Clemente, crypto analyst, tweeted the following tweet.

While Bitcoin’s price has fallen due to risk-off behavior, the fundamentals are strengthening. Intel creates mining chips; Russia is looking to get into mining, Goldman Sachs bullish; Google partnership with Coinbase; El Salvador Bond. It is hard to believe that asymmetry can lead to the downside.
— Will Clemente (@WClementeIII January 27, 2022

The total cryptocurrency market is now worth $1.663 trillion, and Bitcoin’s dominance rate of 41.5%.

com. You should do your research before making any investment or trading decision.