Due to the insolvency of several U.S. banks and the ongoing liquidity problems of supposedly over 186 US banks, as well as the acquisition of Credit Suisse by UBS Bank, Bitcoin and crypto are more bullish than ever. On Sunday, the Bitcoin price peaked at over $28,400.
About 15 years after the bankruptcy of major US bank Lehman Brothers and the Great Financial Crisis, Satoshi Nakamoto’s vision is increasingly coming true. As the US banking system faces another major crisis and bailouts, investors are currently fleeing into Bitcoin.
This is literally what was inscribed in the genesis #Bitcoin block.
It was designed for this environment. pic.twitter.com/xiTV4Cx0jC
— _Checkɱate (@_Checkmatey_) March 17, 2023
Nevertheless, investors in the Bitcoin and crypto space should continue to keep an eye on economic and financial data this week. The all-defining event will be the FOMC meeting and the interest rate decision by the US Federal Reserve Bank (Fed). In addition to the monetary policy decision, the Fed will also publish its updated projections.
Besides that, there are rather minor data points coming up this week, which will probably have little direct impact on the Bitcoin price. On Tuesday, US existing home sales figures for the month of February will be released. On Thursday, the current sales figures of new homes in the US will follow.
Closing out the week on Friday will be the latest US Durable Goods Orders for the month of February. However, none of these data points will be as important as the Fed’s decisions.
Bitcoin And Crypto Investors Have To Watch The Fed
On Wednesday, the Fed will announce its interest rate decision at 2:00 pm EST. At the subsequent press conference at 2:30 pm EST, investors will closely follow what statements the Fed chairman will make about future monetary policy.
The FOMC meeting will supposedly be the most important of the year, as the Fed will publish the dot plot, which summarizes the FOMC’s projections for the federal funds rate over the longer term, for the first time in quite some time and especially since the banking crisis began. A projected pivot as early as this year would be massively bullish for Bitcoin.
According to the CME FedWatch tool, only a slim majority of 53% of analysts still expect a 25 basis point rate hike in March. A whopping 47% even expect a pause.
As recently as March 7, Powell testified before the Senate Banking Committee that the Fed would likely have to raise rates “more than previously expected” in response to sticky inflation. The vast majority of analysts expected a 50 basis point rate hike.
However, in light of the banking crisis, the forecast has completely reversed. Fed chairman Powell has come under massive criticism because of the problems in the banking sector, as his historically fast pace of interest rate hikes has led to problems in the banking sector. Many market players are calling for a shift away from his hawkish monetary policy.
Further rate hikes carry the inherent risk that more banks will go bust. This is also why Goldman Sachs was the first major bank to forecast that it does not expect a rate hike in March given the stress in the banking sector. Deutsche Bank and Barclays have since echoed that prediction.
“In light of recent stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March,” Goldman Sachs stated.
For Bitcoin, a pause in rate hikes and even a hike of just 25 basis points should bolster the bullish momentum in the market, though much will also depend on Powell’s assessment of the current situation at the FOMC press conference.
Pundits will also be paying close attention to Powell’s comments on the Bank Term Funding Program (BTFP) and the new swap lines with five other key global central banks to derive possible hints on a change in fiscal policy stance needed in the near term. In any case, Bitcoin investors should expect a volatile Wednesday.
At press time, the Bitcoin price traded at $28,107, looking extremely bullish. As the 1-hour chart shows, the hourly uptrend is still intact.
Featured image from iStock, chart from TradingView.com