(Kitco News) – Financial markets experienced an uptick in volatility on Wednesday as investors continued to get mixed signals about the state of the economy. Recent reports have shown that inflation remains stubbornly elevated above the Fed’s 2% target, but that didn’t stop Fed Chair Powell from doubling down on his projections for multiple interest rate cuts in 2024.
While speaking at Stanford University on Wednesday, Powell reiterated that he sees inflation on a "bumpy" path down to 2% and expects central bank officials will lower rates at "some point" this year.
But yesterday’s comments from San Francisco Federal Reserve President Mary Daly that there is no urgency to lower interest rates, and that the three rate cuts outlined on the Fed’s dot plot “is a projection and a projection is not a promise,” has investors feeling less confident about rate cuts moving forward.
This led to a volatile day of trading for stocks, which initially climbed higher in trading on Wednesday, only to have an afternoon sell-off plunge the major indices into the red. When it was all said and done, the S&P and Nasdaq finished in the green, up 0.11% and 0.23%, respectively, while the Dow lost 0.11%.
Data provided by TradingView shows that Bitcoin (BTC) started the trading day with a 2.6% sell-off, falling from $66,240 to hit a low of $64,520 in the early morning. From there, bulls staged a multi-hour rally that saw King Crypto hit a high of $66,940 in the afternoon before its price pulled back to $65,915, where it trades at the time of writing.
BTC/USD Chart by TradingView
Longtime crypto trader Koroush AK provided his insights on the state of the market, noting that the worst Bitcoin pullbacks come in the middle of bull markets.
“Expect chop between $74k-$62k,” he said. It will be “harder to trade in this range; altcoins will be easier. Isolated altcoin narratives [are expected] to still run periodically, and market sentiment and [high time frame] structure remain bullish even if we’ve entered more neutral conditions for a few weeks.”
“My plan is the same,” Koroush concluded. “Buy the dip and buy the rip.”
Castillo Trading said he thinks a lot of people are hoping that the price action is similar to what was seen from Dec. 2020 to Dec. 2021, where Bitcoin pumped above $60,000 before pulling back below $30,000.
“In my opinion, this is hopium for traders who don't have the allocation they want before we go higher,” he said. “It's hard to justify buying $BTC at these levels, yes, but also, this is what triggers parabolic moves higher.”
“When little to no interest in an area for buying happens, yet people still want more allocation, they are forced to buy higher when they do not get the downside they are wanting,” Castillo Trading said. “People want $BTC, but buying at $70k seems idiotic when we were sub $20k just one year ago.”
He noted that when the lower price that people are waiting for never manifests, “they are [usually] more than willing to deploy that capital at levels that aren't ideal, which only pushes its price higher.”
“You can't really base sentiment off of reading X posts either,” he noted. “Everyone is bullish, expecting higher in our little niche inner circle, but outside of this, I still think most are unaware of where we are” in the bull market cycle, and where the crypto industry stands in the greater scheme of things.
“Remember, the trend is your friend,” he concluded. “And although things have slowed and started to range, no significant breakdown has actually occurred on Bitcoin.”
Market analyst Crypto Tony provided the following chart outlining how he expects Bitcoin’s price to trade in the near term.
$BTC / $USD - Update
Holding my ground here while i think we see this formation take hold. Holding $63,700 would be my placeholder for the bulls pic.twitter.com/1J6vzzRvjV— Crypto Tony (@CryptoTony__) April 3, 2024
Altcoins in the red
Altcoins traded mixed, with most tokens in the top 200 recording losses.
Daily cryptocurrency market performance. Source: Coin360
Newly launched stablecoin protocol Ethena (ENA) led the gainers with an increase of 29.2%, followed by a 21% gain for Jito (JTO) and a 20.8% increase for IoTeX (IOTX). Memecoin (MEME) was the biggest loser, falling 14.3%, while Pendle (PENDLE) lost 13.8%, and Core (CORE) fell 13%.
The overall cryptocurrency market cap now stands at $2.48 trillion, and Bitcoin’s dominance rate is 52.2%.
