FOMC minutes suggest a “moderate” recession is likely in 2023. Bitcoin price responded to the minutes by holding steady at $30,500. However, economist Alex Krüger predicts a strong Bitcoin rally.
Bitcoin has responded to FOMC minutes by staying calm!
cryptocoin.comAs you follow, the Federal Open Market Committee (FOMC), at its last meeting on June 13-14, decided to suspend interest rate hikes after ten times in a row. He made this decision in response to concerns about tightening credit conditions and to wait and see the effects of past policy measures. Despite the pause, the minutes show that most members expect at least one more rate hike to be needed. The minutes caused only a slight rise in BTC price as an initial reaction.
The Fed was aiming to achieve 2% maximum employment and inflation in the long run. To achieve this, the Fed refrained from raising interest rates. However, Fed Chairman Jerome Powell indicated in later speeches that two more rate hikes may be necessary this year. These increases will allow the central bank to lower the inflation rate to its current 2% target. At the time of this writing, the CME FedWatch tool shows that there is an 88.7% probability that the Fed will raise rates by 25 basis points (bps) at its next meeting on July 26. This probability continues to increase since the last meeting, and last week it rose by 7%.
Therefore, the next meeting will likely result in a target rate increase to 5.25% – 5.50%. Naturally, this will also affect the price of Bitcoin, which has been doing quite well for the past few weeks. It registered a 0.11% increase in Bitcoin price following the FOMC minutes. The coin is trading at $30,560, staying above the $30,000 mark at the time of writing.
Alex Krüger predicts a strong BTC rally
Bitcoin (BTC) slumped below the $31,000 level it recently surpassed. However, economist and trader Alex Krüger has been bullish by setting a high price target, especially in light of recent spot Bitcoin exchange-traded fund (ETF) filings. According to Krüger, the news of the spot Bitcoin ETF filing by the world’s largest asset manager BlackRock was huge and not yet priced correctly. Krüger shares the following assessment:
We have very strong news that the BlackRock Bitcoin ETF will likely be approved. Whether it will be approved is debatable (…), but we’re currently 20% off on this news. And while the probability isn’t around 75%, it’s definitely above 50%. So, the first point is that, on the one hand, the market is not well positioned for this.
Resistance at $31,000 – $37,000
The second point, according to Alex Krüger, is that the first crypto asset is “right on the edge of the $31,000 to $37,000 resistance (…)”. Krüger says $37,000 is the “month level” in mid-May. He also states that BTC is on the verge of a breakout. Therefore, he expresses that he will continue to run after he is broken.
On top of that, the economist emphasizes that the recent trend in Bitcoin’s correlation with other risk assets is temporary and is likely due to the ongoing regulatory assault, which has seen a large number of lawsuits filed against major participants in the crypto market. Moving on from this, Krüger said, “On the correlation side, regulators in the US have been very aggressive since the beginning of April this year. Many major market makers began to move out of the market. This caused correlations to drop to 2020 levels before Bitcoin became a macro asset. This is a temporary situation,” he concludes.
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