The bitcoin (BTC) market at the end of last year was quiet at the $16,000 level, partly due to the effects of consecutive holidays, but it was supported by the rise in the solana (SOL) and litecoin (LTC) markets at the beginning of the year. When the price remained firm, the slowdown in wage growth in December’s US employment statistics was positively received, and the price climbed to the $17,000 level. This accelerated expectations of a decline in the U.S. Consumer Price Index (CPI) in December, and bitcoin’s price moved further and tried to top $18,000.
The year-on-year US CPI has slowed for the sixth straight month, dropping by 0.5 percentage points for the third straight month, recording a steady pace. is on the rise. In response to this, the Bitcoin market price followed the upward trend, returning to around $ 21,000 and regaining the range of decline after the FTX shock.
Afterwards, the market stalled at $21,000, but rebounded to $22,000 as U.S. Federal Reserve Board (FRB) Governor Waller and Philadelphia Federal Reserve Bank President Harker supported a reduction in interest rate hikes. . As a result, bitcoin versus the dollar has fully recovered from last November’s decline and turned to the $23,000 mark.
As the FOMC is approaching, the market has not been able to show a clear direction even if the US GDP growth rate in the fourth quarter of 2022 and the US personal consumption expenditure (PCE) in December show favorable results for the market. However, it is expected to recover to $24,000, supported by the rise of some altcoins.
The Bitcoin market has suddenly turned around since the new year, but the focus of the FOMC in February will be whether the rate hike by the Fed will be reduced, the rate hike will be stopped at 5%, and whether the speculation that the rate will start to be cut by the end of the year will be justified.
In light of DIs below 50, such as the manufacturing and services Purchasing Managers’ Indexes (PMIs), a continued slowdown in inflation data, and trimmed average PCE inflation falling below the cap on the policy rate target, the Fed It can be said that the Fed has become even more cautious about the pace of rate hikes, but senior FRB officials have not made any comments about halting rate hikes or rate cuts, suggesting that market expectations are ahead of the curve. I think
99.9% of the FF interest rate futures market has factored in a narrowing of the rate hike from 50 basis points (bp) to 25bp. be. Rather, we would like to be wary of a scenario in which there is a sense of exhaustion and selling if there is no hint of a moratorium on rate hikes or rate cuts.
Also, on the technical side, bitcoin vs. the dollar has pointed out a divergence in the Relative Strength Index (RSI), and a reversal signal of the price trend is lit. Divergence is a sign that the current price trend is losing momentum, and it is also said to be a signal with a certain degree of certainty.
Based on the above, we believe that the Bitcoin market is fraught with the risk of a near-term correction, but technical support is concentrated around $20,000, which is a psychological milestone, and altcoin buying is supporting the market. However, even if there is an adjustment, we think that it will be only a short-term dip.
Yuya Hasegawa: Bitbank Market Analyst ── After completing a graduate school in the UK, he worked as an analyst in the FinTech industry and the virtual currency market at a venture consisting of people from financial institutions. Market analyst at Bitbank Co., Ltd. since 2019. He has a track record of providing comments to major domestic financial media and contributing to overseas media.
｜Editing and composition: Takayuki Masuda
｜ Top image: bitbank
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