Bitcoin (BTC) consolidated higher through July 28 after U.S. monetary policy changes fueled optimism in risky assets.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
Fed hike sparks fresh crypto optimism
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD rallying to highs of $23,452 on Bitstamp overnight.
The pair had reacted strongly to the US Federal Reserve’s recent interest rate hike, although this was in line with market forecasts. Subsequent comments from Fed Chair Jerome Powell added to the momentum of the breakout.
“I think the reason this brings some relief to the stock market is that the Fed recognizes that there can be implications for growth and the economy because of its policies,” Gargi Chaudhuri, head of iShares investment strategy at asset management giant BlackRock America, CNBC said.
“They realize there are two sides – there is a tradeoff in growth to fight inflation. The recognition is something we’ve heard today that we haven’t heard before.”
Crypto commentators had previously predicted the Fed would be caught between two chairs in the form of forty years of high inflation and the risk of a recession resulting from fighting it.
“Who outperforms here? Nasdaq & Crypto,” wrote Alf, creator of the Macro Compass Newsletter, in part of a Twitter recap of the week’s events.
“Unless the Fed stops enforcing tighter financial conditions on autopilot, real yields will actually start falling again.”
And finally, what is the bond market saying?
We’ve priced in some hikes between now and December, and here’s what we’re left with:
– 50 in Sept
– 25 in Nov
– 25 in Dec
DONE
– Cuts by 50 basis points in 2023
A higher likelihood that the “peak of Fed hawking” is behind us.
12/pic.twitter.com/HyvXvnBf6P
— Alf (@MacroAlf) July 27, 2022
He noted that upcoming rate hikes are not priced in to surpass or even match July’s 75 basis point moves, contributing to “a higher likelihood that the ‘peak of Fed hawking’ is behind us.”
Eyes closed on $23,500 daily
As such, commentators have been cautiously bullish on BTC price action while waiting for the last remnants of volatility to clear the market.
Related: Price Analysis 7/27: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, MATIC, AVAX
“Not rushed yet but daily close above 23450 and will start looking for long setups towards 26500,” popular trader and analyst Crypto Tony wrote that day.
Bitcoin therefore needed to hit and hold its overnight highs to capitalize on a trend reversal.
A very bullish daily close – we closed above the body of our resistance zone. A bearish retest/rejection would have caused us to close below. We may have just entered our higher low. On LTF, pullbacks to green are healthy – hold it on a retest and this is likely to be a complete reversal. https://t.co/bgUEWpjJfh pic.twitter.com/FITJPNJRtL
— CrediBULL Crypto (@CredibleCrypto) July 28, 2022
On-chain analytics resource Material Indicators, meanwhile, viewed what it called a “strong long signal” at the daily close, something that was poised to amplify the short-term bullish case.
“The bear market rally continues,” it concluded in a tweet alongside a buy and sell signal chart.
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