BTC/USD Trade Idea: Bitcoin Could Rise As High As $25,000 In The Short Term

Expectations of a Fed tapering also benefit Bitcoin

Equity and bond markets are not the only ones benefiting from the prospect of a slowdown in the Fed’s monetary policy tightening. The cryptocurrency market has also gained momentum since the start of the week, with Bitcoin even up more than 7% since Tuesday.

This speculation about a slowdown in monetary tightening by the Fed may continue over the next few sessions pending the next FOMC policy meeting next week. Nevertheless, Fed Chairman Jerome Powell could dampen this hope given the still extremely high inflation and the acceleration of underlying inflation.

To be sure, the Fed should start slowing its monetary tightening in the coming months, but that was already announced by the FOMC in September. It is therefore not a real “pivot” for the Fed, since the central bank will continue to raise its interest rates to bring them, as it plans, to a range between 4.50 and 4.75% by the end of the first quarter of 2023.

We would have a real “pivot” if the Fed decides to raise interest rates less than expected, which is unlikely as long as underlying inflation remains at 40-year highs and unemployment remains at higher levels.

The market recovery is therefore likely to be temporary and limited before another leg down as economic risks remain tilted to the downside with the global energy crisis, soaring financing costs and headwinds from the Chinese economy to restart.

Bitcoin Price Daily Chart – Key Levels

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