Bitcoin was rejected once more as it approached the mid area around its current levels. The first crypto by market cap has been trending to the upside over the past week but has been unable to break above critical resistance.
The possible shift in monetary policy has been contributing with the global markets current trend to the downside as investors attempt to price-in the FED’s future action. Bitcoin has been impacted by this risk-off environment, but a lot of uncertainty surrounds the crypto market.
Director of Global Macro for investment firm Fidelity, Jurrien Timmer, recently two scenarios that the markets could follow as the FED prepares to increase interest rates.
In the first of these scenarios, the market “tightens on its own” to “tame” inflation, as Timmer said, with a potential top in 2023 of 2% in interest rate hikes incremented at 25 bps or 0.25% starting next march. This could be the most bullish scenario for Bitcoin and the rest of the global market.
The U.S. financial institution could operate with a passive approach, and not force the financial sectors to enter a massive selloff. The second scenario seems more aggressive, according to Timmer:
The ongoing inflation news will force the Fed to tighten so many times that it eventually “breaks” something, which will in turn force it to pivot much like it did in 2018 after a 20% sell-off in equities.
The Best Moment To Buy The Bitcoin Dip?
Fidelity’s Director of Macro seems optimistic, at least at the moment. Timmer believes the inflation narrative hasn’t force the FED to take extreme measures, so interest rates could top at around 2% which could be the less painful path for Bitcoin and the global financial sector.
Timmer compared the current macro-economic situation with the tightening cycle of 1994. During this period, the market wasn’t expecting the FED to hike interest rates and was also surprised when the institution stopped its tightening program. Time will tell if this cycle will be similar.
On the other hand, Jarvis Lab’s Ben Lilly there is room for a Bitcoin rally before the FED turn full-on hawkish. Lilly presented two previous scenarios, 2004 and 2015, when the financial institution was about to increase interest rates.
As seen below, in 2004, the Nasdaq index trended higher before a sell-off which, as Lilly said, was a good opportunity to buy the dip. Bitcoin and other cryptocurrencies could follow the same pattern as the market enter a “soft period” on higher rates expectation. Lilly said:
Market went soft in anticipation of higher rates. Do we go bullish until the actual hike takes place in mid-March? Then once the hike happens, and market sells off, will it be the best BTD (Buy the Dip) opportuniry for next couple years?
A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.
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