The Bitcoin price is in consolidation mode as investors wait for the upcoming Federal Reserve interest rate decision. The BTC price is trading at $61,730, which is a few points below its all-time high of more than $66,000.
Federal Reserve decision
The biggest catalyst for the Bitcoin price this week will be the upcoming Fed decision that will start today. The bank will then deliver the decision on Wednesday.
Analysts expect that the Federal Reserve will deliver a relatively hawkish interest rate decision. There are several reasons for this. First, recent data shows that the country’s inflation rate is at elevated levels.
For example, on Friday, data showed that the personal consumer expenditure (PCE) remained at the highest level in more than 30 years. Earlier on, data showed that the UK consumer price index (CPI) rose to 5.4% in September. The data is above the Federal Reserve’s target of 2.0%.
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","restrictedCountries":["CA","MX"],"attributes":{},"tableRowLabel":""}],"displayAttributes":[]}"}Therefore, while the rising inflation is transitory, analysts expect that prices will remain at elevated levels for months. Also, there is a consensus that higher interest rates will not lower inflation since the performance of prices is because of supplies.
Second, the labor market is tightening. Recent data showed that the country’s initial jobless claims have fallen sharply. At the same time, the unemployment rate has fallen to 4.8% while wages have risen. Third, other central banks like the Bank of Canada and the European Central Bank (ECB) have started to tighten.
Therefore, there is a likelihood that the Fed will start by tapering its asset purchases. It will also likely hint that a rate hike will come out earlier than expected.
The Fed decision has a major impact on the Bitcoin price. As a relatively riskier asset, its price tends to do well when interest rates are relatively low. However, a hawkish rate will likely not have a negative impact on BTC because it has already priced in.
Bitcoin price prediction
The daily chart shows that the BTC price has more than doubled from its lowest level in July. As a result, the coin has formed what looks like a cup and handle pattern. The recent pullback can be said to be the handle section.
The Bitcoin price has also moved above the 25-day and 50-day moving averages while the MACD has formed a bearish divergence pattern. Therefore, there is a likelihood that the BTC/USD will rebound later this week. If this happens, the next key resistance to watch will be at $70,000.
