Bitcoin reaches highs of nearly $87,500 amid positive market sentiment driven by the Federal Reserve’s maintenance of interest rates and speculation about U.S. crypto policy. Analysts suggest recent lows may signify a bottom for Bitcoin, supported by improving market indicators, including a shift in the Crypto Fear & Greed Index to “Neutral.” Institutional interest is resurging, aided by new products like BlackRock’s IBIT.

Bitcoin recently surged to nearly $87,500, marking a two-week high, largely influenced by speculations around a potential U.S. government crypto policy update and the Federal Reserve’s decision to maintain interest rates. This increase follows a consolidation period around $86,000 and signifies a 3.5% rise after the Federal Open Market Committee meeting, wherein officials opted to keep interest rates steady at 4.5%.

Federal Reserve Chair Jerome Powell noted that inflation is under control, stating it has “eased significantly,” while also confirming expectations for two rate cuts by the end of 2025. His comments contributed to increased market confidence, reflected in the S&P 500’s 1% rise, adding roughly $500 billion in market capitalization.

Arthur Hayes, former CEO of BitMEX, has suggested that Bitcoin may have reached a significant bottom at $77,000. He linked this assertion to the Fed’s announcement regarding a slowdown in quantitative tightening (QT), with reductions in monthly Treasury sales from $25 billion to $5 billion starting in April. Hayes emphasized, “JAYPOW delivered, QT basically over Apr 1,” and indicated that further positive developments could emerge following potential exemptions or a restart of quantitative easing (QE).

Anticipation is also building around changes to U.S. crypto policy, with rumors that President Trump may announce significant updates as early as March 21. This would be Trump’s first major policy disclosure since creating a Strategic Bitcoin Reserve with an executive order earlier in the month. The initial market response to this reserve was subdued, learning it would not compel direct government purchases of Bitcoin.

Technical analysts observe positive indicators in Bitcoin’s price performance, suggesting it requires a further 8% increase to escape a downward deviation. Additionally, the Crypto Fear & Greed Index has shifted from “Fear” to “Neutral,” marking the first time it has moved out of fear since late February. Trader Rekt Capital noted the necessity of this rally to reclaim a preceding price range.

Although economic pressures may prompt the Fed to act, opinions among analysts differ concerning Hayes’ perspective on the cessation of QT. While Hayes posits that QT is concluding, Benjamin Cowen points out that it still persists at a slower pace of $35 billion per month through mortgage-backed securities. Despite Bitcoin’s nearly 22% decline from its January peak of $109,000, optimism remains among participants, with Kain Warwick predicting an adherence to a four-year cyclical pattern.

For Bitcoin’s upwards trajectory to continue, it needs to close above the diagonal resistance at $86,351. Analysis indicates that Bitcoin may respond positively to the rising M2 money supply, suggesting that even a modest liquidity boost could significantly elevate Bitcoin’s price. Altcoins have also demonstrated resilience, with Ethereum, XRP, Solana, and Dogecoin showing gains of 4-10% following the FOMC meeting. Institutional interest appears to be returning, led by BlackRock’s IBIT, which is attracting new capital into the Bitcoin market.

In summary, Bitcoin’s recent price movement signals a potential turnaround, with experts suggesting that the recent lows may constitute a bottom. The Federal Reserve’s decisions and forthcoming updates on U.S. crypto policy are pivotal in shaping market dynamics. Technical indicators and improving investor sentiment provide a bullish outlook, despite differing opinions on the implications of quantitative tightening. As the market evolves, the engagement of institutional investors may further influence Bitcoin’s trajectory towards recovery.

Original Source: coincentral.com

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