BTC

In the ever-evolving world of cryptocurrencies, the impact of external factors such as interest rate hikes and banking crises on Bitcoin’s price trajectory cannot be ignored. As the market grapples with these challenges, investors and analysts are keen to understand their implications on Bitcoin’s future performance.

This Bitcoin price prediction will delve into the ramifications of recent interest rate increases and the banking crisis on Bitcoin’s price, providing insights and predictions to help navigate the uncertain landscape ahead.

Banking Collapses Provide Further Justification to Pause Interest Rate Increases

The debate around the Federal Reserve’s next moves for the rest of 2023 was getting a tad dull, focusing on whether persistent inflation was a sign of an economy in need of a chill pill or if it was due to the lingering, but fading, aftershocks of the massive pandemic and war chaos from yesteryears. But guess what?

The recent collapses of Silicon Valley and Signature banks and upheaval in other parts of the banking world have spiced things up in this discussion.

Here’s my take on what the Fed should do now after these bank failures, in a nutshell:

  1. Before the Silicon Valley Bank’s (SVB) tumble, it was clear that the Fed should hit the brakes on interest rate hikes at this week’s meeting, mainly because of the ongoing slowdown in nominal wage growth.
  2. The SVB fiasco and the following banking drama will likely put a damper on demand. If you thought the Fed should already be easing up on rate hikes (or even hitting the full stop) due to the cooling labor market, the fallout from SVB’s nosedive means this chill will happen faster, making a stronger case for freezing further rate hikes.
  3. The fact that interest rate hikes of nearly 5% in a year caused this much commotion in the financial sector screams a big oopsie in bank management and oversight. These issues need to be tackled in the future, but they’re happening now, and the fallout gives us another reason to say “hold your horses” on more rate hikes.

Fed Hikes Interest Rates

The US Federal Reserve has raised interest rates over the opposition. Indicating that it may stop if inflation continues to fall as expected, the Federal Reserve raised its primary short-term interest rate by a quarter percentage point on Wednesday.

After two days of deliberation, the central bank stated that “some additional policy tightening (rate hikes) may be appropriate” to bring annual inflation down to its 2% target. This statement instead noted that the policymaking committee “will closely scrutinize incoming data and evaluate the implications for monetary policy.”

Bitcoin Price Prediction

The BTC/USD is trading with a bullish flair after falling to 28,250. However, on the 4-hour time frame, Bitcoin has formed a bullish engulfing pattern and is now heading towards the next resistance level of 29,300.

Bitcoin Price Chart - Source: Tradingview
Bitcoin Price Chart – Source: Tradingview

On the upside, if we see more demand for BTC, it has the potential to break above the 29,300 mark. If this happens, BTC will be exposed to the next resistance level at 29,975. Alternatively, on the lower side, BTC is likely to find major support around the 50-day exponential moving average, which is likely to extend support around the 28,650 level.

On the lower side, a break below the 28,650 level has the potential to extend the downtrend until the next support level of 27,823. An additional break below 27,800 can extend the downtrend until the next support level of 27,150.

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