Challenges of the upcoming Fed decision for cryptocurrencies. What fate awaits Bitcoin?
Should the short-term fall in the BTC price be considered a cause for concern?
Bitcoin has had an exceptionally stormy weekend, with its price dropping to just $28,000. According to analysts related to the digital currency industry, the day before the key decision of the Federal Reserve (Fed), the Bitcoin chart indicates difficulties in maintaining support at the level indicated above. Investors and traders are waiting for the release of inflation data. These data are to be published during the meeting of the Federal Open Market Committee (FOMC), which is scheduled for May 2-3. However, regardless of the short-term fluctuations, the long-term bullish scenario for Bitcoin remains strong.
Inflation in the US and the popularity of cryptocurrency assets
There are a whole range of factors affecting the mood of people and companies investing in cryptocurrencies. One of the most important events this week is undoubtedly the meeting of the Federal Open Market Committee (FOMC), which will take place on May 2-3. During these meetings, data on inflation in the US will be published, and the price of BTC will be significantly dependent on, among others, further decisions of the Fed.
Many significant investors' expectations are related to the CPI data. If US inflation turns out to be lower, risky assets like Bitcoin are likely to gain traction. This is because lower inflation rates result in higher risk tolerance.
However, if the Fed decides to raise interest rates in the US, which is not excluded, it could be a very unfavorable event for the entire digital currency industry. An interest rate hike of 50 basis points is likely to lead to strong falls in the cryptocurrency market.
– However, it is worth noting that BTC weakness did not affect the long-term bullish scenario for the oldest cryptocurrency. This is because it is still well above its 100-day and 200-day moving averages. Both of the above-mentioned indicators show that investors currently prefer to wait for higher prices in the longer term rather than bet on short-term profits, wrote Best Owie, a pseudonymous Bitcoinist analyst.
In conclusion, it is worth adding that Bitcoin's dominance may be an extremely unfavorable sign for Altcoins in the near future. Last weekend, the dominance of the oldest cryptocurrency rose to a value not seen in two years. This metric measures the share of BTC in the digital currency market. This value reached a high level of 48.77% on the last day of April. According to experts related to the digital asset sector, this may be bad news for Altcoins. This is because the strengthening of BTC's dominance in the crypto market suggests that hopes for an increase in the value of other tokens may be definitely premature.
