Bitcoin Price Rebounds as Federal Reserve Slows Quantitative Tightening
Bitcoin price has rebounded to around $86,213 following a dip to $77,000 after the Federal Reserve announced plans to ease quantitative tightening. Analysts suggest this may indicate the market has found a bottom as sentiment shifts from fear to neutrality, with some predicting interest rate cuts may begin as soon as April 1.
The recent performance of Bitcoin (BTC) reflects an encouraging recovery following an announcement from the Federal Reserve regarding a slowdown in quantitative tightening (QT). After dipping to $77,000, the cryptocurrency rebounded by 3.5%, now trading close to $86,213, a move viewed positively by analysts amid evolving market dynamics.
Initially reaching its peak at $109,000 in January, Bitcoin had experienced a significant drop, marking its lowest at $77,000 recently. The Federal Reserve’s decision to reduce its monthly sell-off of Treasury securities from $25 billion to $5 billion, commencing in April, is believed to be a contributing factor to the cryptocurrency’s recent resurgence.
Arthur Hayes, co-founder of BitMEX, expressed strong confidence that Bitcoin has reached its nadir, proposing that the worst phase is actually over. He suggested that to confirm a more potent bullish trend, mechanisms such as a Supplementary Leverage Ratio (SLR) exemption or a resurgence of quantitative easing (QE) are necessary.
Further echoing Hayes’ sentiments, Jamie Coutts, chief crypto analyst at Real Vision, indicated that quantitative tightening appears to be effectively ceasing, supported by the reduction in treasury volatility. Jeff Zirlin of Axie Infinity noted that the Fed’s tightening slowdown is beneficial for both crypto and equity markets, asserting that the Fed now possesses considerable flexibility to foster economic support.
The shift in market sentiment is becoming evident, with the Crypto Fear & Greed Index transitioning from a state of fear to neutrality, hitting a score of 49. Kain Warwick of Infinex maintains a bullish perspective, viewing the recent price movements as part of a standard correction within an ongoing upward market cycle.
In terms of future predictions, some analysts speculate the Federal Reserve may commence rate cuts as early as April 1. This aligns with remarks made by former President Donald Trump, emphasizing the need for reduced rates to stimulate economic recovery.
However, not all analysts concur with the timeline of QT easing. Benjamin Cowen cautioned against assuming a rapid end to monetary tightening, pointing out that the Fed continues to decrease its balance sheet through mortgage-backed securities.
Overall, the recent price activity indicates a renewed vigor for both Bitcoin and other cryptocurrencies, with altcoins such as Ethereum, XRP, Solana, and Dogecoin experiencing notable rebounds in similar timeframes. Analysts anticipate that any relaxation in liquidity constraints may bolster asset valuations, including Bitcoin’s market price.
Bitcoin’s recent resurgence signals improved market conditions following the Federal Reserve’s upcoming plans to slow down quantitative tightening. While analysts project a possibly bullish trend ahead, expectations regarding interest rate cuts and the future of quantitative easing remain varied. The turnaround in investor sentiment from fear to neutrality further underscores a potential stabilizing phase for Bitcoin and the broader cryptocurrency market.
Original Source: moneycheck.com
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