Following Wednesday’s Federal Open Market Committee (FOMC) minutes, forecasts point to a March rate hike, but equities also fear geopolitical instability this week. Short-term Bitcoin price action looks unappealing thanks to a macro cocktail of downside triggers.
The president of the United States presented a Russian invasion of Ukraine as an imminent fact. Joe Biden and other high officials made the claim this Thursday, February 17, which precipitated a fall in the main actions of the US stock market and that of cryptocurrencies. Bitcoin posted an 8% decline this Thursday and is hovering above $40,000.
The surprise appearance at the United Nations, this Thursday, of the Secretary of State of the United States, Anthony Blinken, and the declarations of President Biden about a potential incursion “in a matter of days”, ignited all the alarms among investors and precipitated the markets down.
Previously, Bitcoin had posted a rally earlier this week and was attempting to break the $45,000 resistance. With this push, the cryptocurrency market managed to exceed USD 2 trillion in capitalization, as reported by CriptoNoticias, on Tuesday 15th. The fluctuation above USD 44,000 maintained for two days, until the abrupt fall this Thursday.
Fed Hints at interest Rate Hikes
Data from Cointelegraph Markets Pro and TradingView showed the BTC/USD pair trading in a slightly widened zone with $44,500 as the top for the past 24 hours.
Overnight, the pair had returned to the top of its intraday range following comments from the US Federal Reserve.
The minutes of the Federal Open Market Committee (FOMC) of the meeting at the end of January, expected to give clues about possible increases in interest rates, ended up giving few surprises. The first hike could come in March, but there has been no firm commitment to the process.
“The Committee tries to maximize employment and inflation at a rate of 2% in the long term,” read an accompanying statement. The FOMC added that, “in support of these goals, the Committee decided to maintain the target range for federal funds interest rates between 0 and 1/4 percent. With inflation well above 2 percent and a strong labor market. The Committee hopes that it will soon be appropriate to raise the target range for federal funds rates.”
The FOMC also remarked that it intended to completely curb asset purchases in March, in line with previous plans, given that February purchases were to amount to at least $30 billion.
With little new information, cryptocurrency markets were uninspiring heading into Thursday. However, optimism was still present thanks to the strength of the BTC price in the last two weeks.
“My bias has changed a bit and now favors a squeeze towards $53,000 before mid-March,” popular trader and analyst Pentoshi said as part of his latest Twitter update.
Others also pointed to the comparatively strong price performance this month compared to previous episodes in Bitcoin’s decline from all-time highs last November.
For example, rallying close to $33,000 in January successfully averted a miner capitulation event in which miners must sell or stop mining altogether because the Bitcoin spot price is lower than its production cost.
Matthew Hyland, an on-chain analyst who also does technical cryptocurrency analysis, has asserted on Twitter that there is “no reason to panic until support failed, no reason to be too excited until resistance breaks. Just let it do its thing; take your emotions out of it.”
Tensions in Russia continue to weigh on stocks and cryptocurrencies
Other macroeconomic signs of the day came from the new uncertainty surrounding the novel Russia-Ukraine, with the appearance of reports of hostilities overnight. Reports of violence in the Ukraine-Russia standoff added to the gloom, coming after conflicting claims of de-escalation by Russia and an “imminent” invasion by the US government.
Previously, the US government called claims that Russia was trying to de-escalate the situation on the Ukrainian border “false”, something that, on the contrary, would have made markets nervous.
“Yesterday, the Russian government said it was withdrawing troops from the Ukraine border… now we know it was false,” a senior official quoted by the Financial Times on Wednesday.
Stock futures were down at least 0.5% before the opening on Wall Street.
By Audy Castaneda
