Fundamental
Overview
Bitcoin is now up more than
50% since the election day as the bullish momentum in the cryptocurrency
exploded following Trump’s victory. This shouldn’t be surprising given that
Trump vowed to make the US the crypto capital of the planet.
Another bullish driver has
been the US economy which not only has been doing well but started to
re-accelerate amid the Fed’s easing and the expectations of expansionary fiscal
policies like tax cuts and deregulation.
For now, there’s no real
top in sight as we would likely need a contractionary monetary policy or a
notable slowdown in the economy, so buying the dips remains the favourite
strategy. The risk in 2025 will be inflation and the Fed. If the central bank even
slightly mentions the need for some tightening, then we could see some big
corrections in all risk assets.
The Fed today is expected
to cut by 25 bps bringing the FFR to 4.25-4.50%. We will also get the updated
Summary of Economic Projections (SEP) where growth and inflation should be
revised upwards, and the Dot Plot will likely show two rate cuts in 2025. Fed
Chair Powell should acknowledge the strength in the US data and announce a
slowdown in the pace of easing.
This is already priced in
as the market expects just two rate cuts in 2025, with the first one coming in
March at the earliest. Therefore, the market reaction will be driven by
deviations from the expectations.
Bitcoin
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that Bitcoin is trading above the key 100K level. From a risk management
perspective, the buyers will have a better risk to reward setup around the trendline
where they will also have the 100K support
for confluence.
The sellers, on the other hand, will want to see the price breaking lower to
extend the pullback into the 90K price area.
Bitcoin Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the setup around the trendline and the 100K support zone.
There’s been a pretty choppy price action in the last couple of weeks as the
bullish momentum waned a bit. The catalysts to watch now are the FOMC decision
today and the inflation data in the next months. We could see a knee-jerk
reaction lower on a hawkish cut today even though it’s already priced in. The
dip-buyers might take advantage of that to position for a rally into new highs.
Bitcoin Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor support around the higher low at 103300 level. The
sellers will look for a break lower to extend the pullback into the 100K
support, while the buyers will want to see the price breaking above the
counter-trendline to target new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
Today, we have the FOMC Policy Decision. Tomorrow, we get the latest US
Jobless Claims figures. On Friday, we conclude the week with the US PCE data.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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