As an experienced market analyst, I have seen my fair share of market fluctuations and trends in the crypto space. The recent price action of Bitcoin (BTC) following the Federal Reserve’s decision not to cut interest rates has been intriguing.
As a crypto investor, I was relieved to see Bitcoin’s price rebound on May 2nd when the Federal Reserve announced they would keep interest rates unchanged. Although this decision dashed my initial expectations of potential rate cuts in 2024, I understood that the stability in monetary policy could contribute to market confidence and potentially lead to further growth for Bitcoin.
In the FOMC minutes published on May 1st, the Federal Reserve indicated that it would maintain the interest rate range between 5.25% and 5.50%. However, they expressed a need for more assurance that inflation is trending steadily towards the 2% target before considering any reduction in rates.
The Federal Reserve announced it would decrease the rate of its balance sheet shrinkage, or quantitative tightening (QT), from $60 billion monthly to only $25 billion monthly.
Starting in June, the Committee will decrease the rate at which it sells off its Treasury securities by lowering the monthly limit for redemptions from $60 billion to $25 billion.
As a market analyst and user of X, I observed that the Federal Open Market Committee (FOMC) press release conveyed conflicting messages. On one hand, it expressed a dovish stance regarding the balance sheet. On the other hand, it leaned hawkish in relation to rate cuts.
As an analyst, I’ve observed that the latest FOMC decision appears to have sparked optimism among investors, leading to a surge in risk appetite and rising asset prices. For instance, Bitcoin (BTC) experienced a notable uptick shortly after the news broke, recording a gain of over 3% within the last 24 hours, reaching a price of $59,077 at the time of publication.
On May 2, Bitcoin’s value reached a peak of $59,482, causing speculation among investors if the declining trend had come to an end.
Bitcoin price is repeating the 2016 cycle
In the past few days, Bitcoin experienced a significant decrease in value, reaching its cheapest point in two months. This represented a decline of approximately 6.7% compared to its price following the halving event.
As a market analyst, I’ve noticed that in the latest discussion about Bitcoin’s (BTC) price behavior, Rekt Capital, a renowned trader and analyst, pointed out a striking resemblance between the current trend and the aftermath of the 2016 Bitcoin halving.
“Bitcoin has once again repeated 2016 history in this cycle by recently deviating to the downside below the current Re-Accumulation Range Low.”
As a crypto investor looking back at the market after the 2026 Bitcoin halving event, I’ve noticed that the “Re-accumulation Range” saw some “further price adjustments.” These corrections reached a maximum of approximately 17%, and they persisted for as long as three weeks.
As a crypto investor, I’ve noticed a decline of 6% so far in the Bitcoin price. According to Rekt Capital, this deviation could mean that the price may continue to drop due to standard market cycles playing out.
How much deeper? He noted,
“The answer is not much deeper and for not much longer before Bitcoin finally bottoms.”
Bitcoinprice rebound backed by “crowd capitulation”
Examining the intricacies of Bitcoin’s on-chain data offers valuable perspectives on its rebound after touching the $57,000 mark.
As a crypto investor, I keep a close eye on various metrics to make informed decisions. One such crucial metric is the Short-Term Holder Market Value to Realized Value (STH MVRV) ratio. Based on data from Santiment, this ratio currently hovers around -6%. In simpler terms, it suggests that short-term investors have realized losses totaling six percent more than the current market value of their holdings. This could indicate a bearish sentiment among short-term investors and may serve as a potential selling signal for some.
The ratio we’re discussing here represents the comparison between Bitcoin’s current market value and the average price at which the last transactions occurred, referred to as the realized value.
Based on the findings from the market intelligence firm, markets exhibit the best rebounds when the MVRV (Moving Average of Variable Value) ratio lies within the negative zone.
As a market analyst, I’ve observed that the discrepancy between trades executed at a loss versus those at a profit could be indicative of an impending market rebound in the near future. This imbalance might suggest that investors are selling off their holdings due to fear or uncertainty, potentially setting up a buying opportunity for those looking to enter the market. However, it’s essential to remember that this metric alone should not be relied upon as the sole indicator of market direction and should always be considered in conjunction with other relevant data points.
According to Santiment’s chart, more bitcoins are being transferred after incurring a loss compared to those transferred following profitable transactions.
“This often correlates well with bottoms, as it is a major sign of crowd capitulation.”
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2024-05-02 21:24