Bitcoin is in Turmoil, is the Chinese New Year Market Coming?

[TL；DR]:

After the Bitcoin ETF was approved, the coin price hovered between $40,000- $48,000, representing a sideways decline.

If the Federal Reserve’s interest rate cut plan can be successfully implemented, it will inject more liquidity into the cryptocurrency market and may further drive up the price of Bitcoin.

In the current era of major fundamental game weakness and technical recovery, it seems difficult to replicate last year’s Chinese New Year rally. However, in the long run, Bitcoin still faces a sea of stars ahead.

Introduction

Since the landing of the spot Bitcoin ETF, the market has been in a volatile market with positive returns. Although various macro factors have started a long short game, the impact of these factors still appears dull and distant. This article will analyze the Bitcoin market for everyone and look ahead into future trends.

Hovering Between $40,000 - $48,000, Representing A Sideways Decline

According to the Gate.io market, as of the writing date, the price of Bitcoin against the US dollar (BTC/USD) is around $43,000, showing a mild decline of approximately -0.04%.

Within the time frame of observing the daily chart, it is evident that the market is in a volatile range of $40,000 to $48,000. From the perspective of price amplitude and trading volume, the current market sentiment is in a subtle equilibrium state.

Source: Gate.io

Both the recent dull fundamentals of market games and the technical indicator orientation stipulate that the market is indeed in a state of confusion and recovery after spot ETFs.

From a purely technical perspective, the current value of the Relative Strength Index (RSI) is 54, and the price is around the mid-term trend moving average MA60, which reflects mild volatility.

After the passage of spot ETFs, long-term funds still need further entry. Faced with the halving market at the end of April, it is obvious that the timing for short positions to enter is not appropriate. With a large number of on and off exchange funds waiting for direction choices, prices can only choose the current horizontal drop to rest on technical indicators and market sentiment. The current dull market situation also indicates that the market seems to be at a critical crossroads, More clear signals are urgently needed to guide the future direction.

The Positive Impact of the Federal Reserve’s Interest Rate Policy Shift

Federal Reserve Chairman Powell stated on Monday’s interview program that the Federal Reserve will remain cautious when deciding to cut interest rates, as the current strong economy and declining inflation trends provide them with confidence. He mentioned that geopolitical and other risk factors are also being considered.

This interview was conducted after last week’s Federal Reserve interest rate meeting, which adjusted the wording of interest rate hikes but emphasized the need for more confidence to support rate cuts.

Source: MacroMicro

The January employment report showed a strong performance in the US economy, with 353,000 new non-farm jobs added and the unemployment rate remaining low.

This undoubtedly compresses the policy elasticity of recent interest rate cuts, but Powell has still elaborated on his monetary policy strategy, expecting to implement three interest rate cuts in 2024 to promote sustained economic prosperity and effectively curb inflation in the United States. The core goal of this strategy is to gradually lower the benchmark interest rate from its current level, the highest point in 23 years, to 4.6%.

He particularly emphasized the stability of the job market, believing that the current employment situation is the best in recent years, and striving to minimize the risk of economic recession.

In addition, Powell also promised to implement interest rate cuts cautiously and in stages, which not only increased market confidence in the US economy, but may also alleviate concerns within the cryptocurrency market. After all, a stable and continuously growing macroeconomic environment is crucial for Bitcoin and other cryptocurrencies.

Overall, Powell’s strategy is expected to paint a positive outlook for the global economy. If the interest rate cut plan is successfully implemented, it will inject more liquidity into the cryptocurrency market and may further drive up Bitcoin prices.

The Fundamentals are Gradually Improving, and the Future of Bitcoin is Promising

In addition to the expectation of loose peripheral liquidity brought about by the Federal Reserve’s interest rate cut, the endogenous factors of Bitcoin, such as the fourth halving, inflow of spot ETF funds, and the expected increase in Bitcoin ETF approval in Hong Kong, can’t be ignored.

Cryptocurrency analyst Don Alt predicts that the price of Bitcoin may climb to $60,000 after breaking through certain key barriers. He specifically pointed out that $38,000 and the region between $44,000 and $45,000 are important levels that Bitcoin needs to overcome first, and the price is unlikely to drop significantly to $30,000.

Another analyst, Fred Krueger, is more optimistic, believing that a historic high will be reached before the halving (i.e. in April).

However, in terms of long-term market trends, XForceGlobal believes that BTC will first hit a high point and then fall to a low point. BluntzCapital also has the same idea.

In a recent interview, Wood and Brett Winton from ARK discussed Bitcoin’s outstanding performance relative to gold in economic difficulties. Especially during the regional banking crisis in March 2023, even though other investments faced difficulties, Bitcoin still achieved a 40% increase.

Although Bitcoin prices have temporarily fallen after ETF approval, Wood believes that the current market is only a short-term fluctuation. She predicts that as more and more people enter the market through spot Bitcoin ETFs, especially large investors, the price of Bitcoin will continue to rise.

Source: ARK

As expected, in this year’s BIG IDEAS, ARK continued to emphasize the positive outlook of Bitcoin as “digital gold” and its resilience in the crisis, which undoubtedly provided confidence for investors and may drive up Bitcoin prices, although the market may fluctuate in the short term.

In summary, the landing of spot ETFs has put an end to the speculation in the Bitcoin market. Short term downturns or fluctuations do not seem difficult to understand. In the current era of weak fundamental games and technical recovery, it seems difficult to replicate last year’s Spring Festival rally. However, in the long run, Bitcoin still faces a sea of stars ahead.