Elon Musk Takes on the Fed’s Inflation Policy
Bitcoin Grinds Near $30K. Is the Rally Over?
Elon Musk, the maverick CEO of Tesla and Twitter, known for his unorthodox views, recently expressed his criticism of the US Federal Reserve’s “heavy-handed” approach to inflation containment. In a series of tweets on March 29, Musk sparred with Twitter users on the topic of American macroeconomic policy, questioning the wisdom of “excess government spending.” Musk continued by saying that the Fed’s policy has become a “serious issue.”
The cryptocurrency market in general and Bitcoin in special, are highly responsive to the Fed’s interest rate policy. Although inflation has shown signs of coming down, the Fed has continued to raise rates, causing banks to buckle under pressure and leading to several bank failures. Musk’s opinion is that this approach has gone too far and that the US dollar is rapidly losing its allure, a fact that is aggravated by the ongoing European banking crisis.
Whether Musk’s critique of the Fed is valid or not, one thing is certain: his bold opinions and Twitter spats continue to generate buzz and keep the public guessing about what he’ll say next. As proved many times before, his opinions can have a great effect on cryptocurrencies, so keep an eye out for his tweets.
Chart Analysis – BTC/USD
Bitcoin is currently changing hands at $28,100 after a brief move above $29,000, which occurred Thursday. The price level of $29,000 had been breached before (last Friday), but the bulls failed to maintain such a high price.
The chart shows two failed breaks of $29K, both occurring in a short while and after a strong move up. This type of price action shows that the bullish momentum is starting to fade and predicts a bearish move in the form of a retracement. Even if a retracement doesn’t materialize, it is likely to see a period of sideways movement, without clear direction.
However, today a very important economic indicator will be released: the Core PCE Price Index. This is the Fed’s favorite inflation measurement tool but it tends to be overshadowed by the Consumer Price Index which is released about 10 days earlier. As we know, lately inflation has been a major driver of prices, so a surprise reading for the PCE Index will likely have an impact on various markets, including crypto. The release is scheduled at 12:30 pm GMT.
The levels to watch are $29,000 and $30,000 to the upside, while to the downside, the first important barrier sits at $26,600, which is the bottom of the current range. A break of either level may trigger additional movement in that direction.
