The Fed Takes a Break. How Will Bitcoin Respond?
Bitcoin Tests $25K. BlackRock ETF Could Spark Rallies.
During Wednesday’s Fed Meeting, the FOMC decided to pause the rate hikes. Although the US Dollar weakened against its major counterparts as a result, Bitcoin failed to capitalize. The apex cryptocurrency briefly dropped below $25,000 but has since recovered and is currently trading at $25,520.
During Wednesday’s press conference, Fed Chair Jerome Powell stated that “Nearly all Committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2 percent over time.”
The fact that Bitcoin and the crypto market as a whole didn’t have a bullish reaction could be a lingering effect of the SEC lawsuits against Binance and Coinbase, and also a reflection of the lack of overall investor confidence in digital assets.
In an interesting development, legacy financial giant BlackRock, announced the possible launch of a Bitcoin ETF. If the launch goes through, this would boost confidence in BTC as an investment asset and would probably propel it higher.
On June 16, Mike Novogratz, Galaxy Digital CEO and well-known Bitcoin bull said that a BlackRock Bitcoin ETF would be the “best thing that could happen to $BTC.”
Supporting this view, crypto analyst James Edwards said that “It’s unlikely that BlackRock would push forward with an ETF of this nature without serious consultation with regulators and confidence in Bitcoin’s future legal status”. Could this mean that BlackRock knows the SEC’s opinion regarding Bitcoin? Either way, BlackRock is not the first investment company to apply to the SEC for a Bitcoin ETF. Grayscale, ARK Invest, Valkyrie Investments, and Fidelity are among others that pursued similar endeavors.
Chart Analysis – BTC/USD
The pair is at a crossroad and that crossroad is the support level at $25,000. Since the failed move above $30,000 in mid-April, Bitcoin has been grinding lower, capped by a bearish trend line. There was no higher high, but multiple lower lows, so we can say that BTC/USD is in a downtrend since the peak above $30K.
There are a few factors that may trigger a rally: $25,000 is an important S/R level, which will be difficult to break on the first attempt; the price is bouncing on the lower Bollinger Band and the RSI is showing bullish divergence. Also, let’s not forget about the BlackRock ETF, which may add investor confidence.
On the other hand, the pair is trading below the 50-day MA, below the bearish trend line and the Bollinger Bands are slightly expanding, which is a sign of momentum. To conclude, we are dealing with a ‘bounce-or-break’ scenario and the outcome will probably determine the pair’s next medium-term direction.
