Bitcoin bounces from support ahead of the Fed’s decision
- Bitcoin found support at $25k (again)
- YTD performance remains impressive
- A dovish Fed may trigger even more strength
Cryptocurrency investors may have been disappointed by the lack of volatility during the summer months—after all, Bitcoin, the leading cryptocurrency, only consolidated levels.
But one should keep in mind that Bitcoin rallied strongly in 2023. It returned over 61% in the trading year, and the bias remains bullish.
The bullish perspective is even more obvious if one looks at the yearly returns of Bitcoin. Since 2010, only in three years did Bitcoin deliver negative returns.
Buying the dip seems to have worked every time, even though the dips were quite scary.
Will the Fed’s decision boost Bitcoin?
Tomorrow, the Federal Reserve of the United States (Fed) is expected to hold the funds rate steady. As always, the details in the FOMC Statement and the press conference will move markets.
Higher inflation than the Fed’s target was the main cause of rising interest rates. Now that inflation comes down from its highest levels, the Fed may feel comfortable that it will reach the target in a timely manner.
Therefore, a dovish Fed would trigger weakness in the US dollar and strength for Bitcoin.
The technical picture also favors more Bitcoin strength. The market bounced twice from $25k and now trades above $27k. A dovish Fed would send Bitcoin back to the $30k resistance area with big chances to move even higher.