February 2, 2023 – The Fed confirmed the market expectation of a 25 bps interest rate hike, taking Bitcoin prices above US$24k for a period, but it stabilized around US$23.8 later. The deceleration of the pace of rate hiking was largely expected by market participants, but the Fed’s governor, Jerome Powell, commented that a disinflationary process has started, fueling a positive reaction from risk assets, including cryptocurrencies. Although Powell has also pointed out that there will be additional hikes, the Fed has set the expectations of improved macro conditions. Therefore, the next Fed’s decision on interest rate in March could be less of an event, all else equal. So the question for Bitcoin and other cryptoassets is “What’s next?”.
As Fed’s decision was in line with the market’s expectations, which reacted positively, it gives room for a bullish technical signal that preceded bun runs in the past to form. The “Golden Cross” happens when the 50-day simple moving average (SMA) of the asset’s price moves above its 200-day SMA, producing a cross on the price chart. If Bitcoin continues the current trend, it could form its first golden cross since September 2021 in the next week or two, according to the platform TradingView. It seems to us that without macro headwinds ahead, technical narratives could persist in the crypto space, underscoring the continuation of January’s rally.
On the other hand, 72% of institutional traders have signaled “no plans to trade crypto/digital coins” in 2023, according to a JPMorgan’s survey. Out of 835 traders from 60 different global locations, only 14% said they will either continue to trade in the digital asset market or begin trading this year. The remaining 14% of respondents said they didn’t plan on investing this year but may do so within the next five years. We view these results as positive because they show that Bitcoin and other cryptoassets have been able to recover from the lows of the bear market without much help from institutional investors. Moreover, this kind of survey serves as a “market pulse”, and it may change quickly, which is likely if the uptrend continues, and FOMO kicks in.
- Bitcoin spikes above $24K as Fed chair Powell talks of ‘disinflation’
- Bitcoin Shrugs Off Fed Rate Hike to Hit Six-Month High
- Bitcoin, S&P 500 Close In on Bullish ‘Golden Cross’ Signal
- 72% of institutional traders are crypto-skeptical this year: JPMorgan
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Therefore, we built a governance level in the crypto market only compared with that of traditional financial institutions.