Signs of reaching the end of the Fed’s key rate hike cycle could be the catalyst for a strong Bitcoin rally. According to Matrixport analysts, the first cryptocurrency could rise in price by 20%, up to $35,000-36,000.
2/10:A #breakout could lead to a 20% increase from current prices, setting a target of $35,000/$36,000 for #Bitcoin (#BTC). pic.twitter.com/zCctXEX8gC
— Matrixport (@realMatrixport) May 4, 2023
On May 3, the Fed raised the key rate range by 25 basis points, to 5-5.25% per annum. Bitcoin held above $28,500.
Earlier, the head of the Fed, Jerome Powell, during a speech before Congress, said that there was a high probability of further tightening of monetary policy. However, the collapse of American credit institutions and the Swiss investment bank Credit Suisse made investors expect softer steps from the regulator.
Analysts at Matrixport also cited turbulence in the US banking sector, which requires liquidity injections and guarantees for buyers of bailouts, as a factor in completing the rate hike cycle.
From the point of view of technical analysis, specialists pointed to the impending breakdown of the upper edge of the tapering wedge formation. Confirmation of the hypothesis will lead to further upward movement to the height of the figure.
In addition to the Fed, the specialists named the resumption of corporate buybacks of their own shares from the market after the end of the season of quarterly reports as a driver. In total, companies can spend $1 trillion for these purposes this year.
“This will continue to be a tailwind for equities and risk assets in general.” experts explained.
Matrixport took note of the decline in trading volume, highlighting “limited resistance on the way up.”
Analysts also noted activity in the DinoLFG, Pepe, Wojak, Chacon, and IgnoreFud meme tokens as a sign of improving cryptocurrency market sentiment.
“Forecasts for May could lead to a significant increase in fees as a percentage of total miner income to the levels we saw in May 2021”they concluded.
Earlier, Matrixport pointed out the limited effect of Mt.Gox compensation payments.
Recall that the approaching Fed meeting has strengthened bearish sentiment in crypto funds.
Galaxy Digital CEO Mike Novogratz predicted that bitcoin would reach $40,000 after the Fed began cutting its key rate.
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