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Bitcoin tests may high ahead of the FOMC rate decision – Could BTC break out regardless?
BTC tests the recent range’s upper ceiling.
US-China trade talks are planned for the weekend.
New Hampshire signs law to buy Bitcoin with state funds.
FOMC is expected to leave rates on hold.
Seasonality could lend support.
Bitcoin technical analysis.
Bitcoin has risen 2.8% over the past 24 hours, testing the upper bounds of the recent consolidation range within which it has traded over the past 2 weeks. It’s worth noting that Bitcoin’s previous consolidation phase in April lasted 2 weeks before a sharp move higher.
Bitcoin's rise comes amid reports that US and Chinese officials will hold trade talks this weekend in Switzerland. This could potentially de-escalate the trade war, which has hurt risk sentiment over the past month. Any signs of a thawing in relations between the two largest economies could support Bitcoin higher.
This wasn't the only positive development. The US state of New Hampshire signed a law allowing the state treasurer to invest 5% of public funds into Bitcoin. This could be the start of a bigger movement, a spark, a wave of Bitcoin adoption in state finances, lifting BTC demand, a bullish scenario for Bitcoin.
Institutional demand has also remained strong in recent weeks. BTC ETFs are on track to book net inflows for a fourth straight week, with over $5 billion in net inflows across this period. Ongoing institutional demand could help lift BTC towards 100k.
FOMC rate decision
Attention will now turn to the Federal Reserve rate decision. The Fed is expected to leave rates unchanged at 4.25%- 4.5%, so the statement and Fed Chair Jerome Powell’s press conference will be the primary focus. With the labour market holding up and inflation still above 2%, the Fed has no reason to reduce rates just yet. However, the Fed is in a challenging spot owing to the divergence between US soft data, which has deteriorated significantly, and US hard data, which has so far remained resilient despite Trump’s trade tariff turmoil.
The market will watch closely for any change in the Fed's stance. A more hawkish-sounding policy could spur a short-term sell-off in BTC. However, despite the unclear economic outlook, Bitcoin has outperformed US equities and Gold over the past month.
#FOMCMeeting#