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Bitcoin hits a high of $23,815 as the Fed decreases its pace of interest rate hikes
(Kitco News) - Fed day finally arrived and went down as expected, with the Federal Reserve raising the benchmark interest rate by 25 basis points to bring the federal funds rate to a range of 4.5% to 4.75%, its highest level since October 2007.
Following the rate hike announcement from Fed Chair Jerome Powell, which aligned with the pre-market consensus, asset prices across the crypto and traditional markets headed higher as a decrease in the magnitude of rate hikes was interpreted by investors as a signal that quantitative tightening will soon come to an end.
The S&P, Dow and Nasdaq all rallied out of negative territory following the rate hike, ultimately finishing the day in the green, up 1.05%, 0.02%, and 2.00%, respectively.
Data provided by TradingView shows that Bitcoin’s (BTC) price reversed from its daily low of $22,275 following the press conference, experiencing a 4.6% intraday turnaround to hit a high of $23,815 before pulling back to support at $23,700.
BTC/USD 4-hour chart. Source: TradingView
According to Kitco senior technical analyst Jim Wyckoff, “BTC bulls still have the firm overall near-term technical advantage as a price uptrend is in place on the daily bar chart” following the rate hike from the Fed, which means “The path of least resistance for prices in the near term remains sideways to higher.”
History suggests that 2023 will be bullish for crypto
A historical look at how Bitcoin has faired following a bullish performance in January was provided by Markus Thielen, the head of research at MatrixPort, who noted in his most recent update that “When Bitcoin prices are up in January, as has happened six times, then the return for the remaining year (Feb – Dec) has averaged +245%, with five out of those six years (83%) showing positive returns.”
The only year that Bitcoin prices decreased following a positive January was in 2014, just after prices peaked for that bull market, Thielen said. “This is obviously far from today’s set up after Bitcoin prices declined by -67% from their 2021 peak.”
As for what could potentially propel a bull market in 2023, Thielen pointed to the next Bitcoin halving – currently on track to take place in March 2024 – as a catalyst that “has tended to be very bullish for crypto prices.”
“Hence, there is a high statistical probability that Bitcoin prices could double from here until year end. This could bring Bitcoin prices to $45,000 by Christmas 2023,” Thielen concluded.
To support the idea that Bitcoin could head higher from here, several analysts on Twitter noted that an inverse head and shoulders pattern is forming on the Bitcoin chart, which is a potentially bullish sign that the top crypto is currently in re-accumulation and could soon head higher.
#Bitcoin ??
— Mags (@thescalpingpro) February 1, 2023
Looks like price is forming a massive Inverse H&S Pattern.$BTC is currently forming the right shoulder which looks like re-accumulation before the next leg up??#crypto #btc pic.twitter.com/mS3Q5Fvjth
Meanwhile, market analyst Crypto Tony posted the following chart warning about the potential for a pullback to the low $20k’s following today’s price pump.
Spike up to $25,000 on $BTC for the markets then ... pic.twitter.com/M9QoEBgEBk
— Crypto Tony (@CryptoTony__) February 1, 2023
Altcoins rally higher
The bullish move in Bitcoin helped propel the altcoin market higher, with all but eight tokens out of the top 200 in the red for the day, while multiple projects experienced double-digit gains.
Daily cryptocurrency market performance. Source: Coin360
The largest increase was recorded by Status (SNT), which increased 28.2% to a price of $0.0335, followed by a 21.48% gain for Synapse (SYN) and a 19.96% increase for Optimism (OP).
The overall cryptocurrency market cap now stands at $1.077 trillion, and Bitcoin’s dominance rate is 42.4%.
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