Bitcoin Holds Above $23,000 as Traders Watch Next Feds Meeting

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Bitcoin (BTC) held above $23,000 on Friday as traders waited next week for the Federal Open Market Committee’s decision on interest rates and any clues policymakers might drop. fall as to the end of their hiking campaign.

The largest cryptocurrency by market capitalization recently changed hands at around $23,100, up 0.1% for the day.

2023 has been a blistering year for bitcoin, with the price jumping over 40% since New Year’s Eve. BTC topped $23,000 for the first time since mid-2022 about a week ago and managed to stay in this territory.

Bitcoin is likely to consolidate further ahead of the Federal Open Market Committee (FOMC) decision, with downside risks if the Fed sticks to its hawkish mantra, wrote Edward Moya, senior exchange analyst at Oanda, in a Friday note on the federal government. Reserve Rate Setting Unit.

Traditional markets also edged higher, with the S&P 500 index rising about 0.3%.

The crypto rally came after the latest Personal Consumption Expenditure (PCE) report showed a slowdown in inflation late last year, a target the Fed was aiming for with rate hikes. The CME tool FedWatch currently shows that traders see around a 99% chance that the FOMC will raise rates by 25 basis points (0.25 percentage points) at its February meeting.

With the recent broader market rally, major crypto assets like bitcoin and ether (ETH) have outpaced stocks this year: ETH is up around 32%, while the market index CoinDesk is up 39% increase. In comparison, the S&P 500 and the Nasdaq Composite index rose 6% and 10% respectively.

Bitcoin and ether have outperformed stocks so far this year. (CoinDesk)

Joel Kruger, market strategist at crypto exchange LMAX Digital, said that from a technical perspective, the price of BTC is currently overbought, as shown by the daily Relative Strength Index (RSI) which measures the extent of recent price changes.

According to data from TradingView, the RSI indicator showed a level of 81.9 on Friday. (Readings above 70 suggest an asset is overbought.)

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The TradingView chart shows that the relative strength index has risen since mid-January. (TradingView)

Kruger told CoinDesk that BTC’s next major resistance to watch is around $25,200 based on its August high. He would not rule out the possibility of seeing BTC drop $10,000 in the first half or see its rally above $50,000 in the second half.

There’s plenty of room to go either way, he said. I just wonder if there’s one more shoe to drop before we finally see that next big push.

Data from Coinglass shows BTC funding rates currently hovering around 0.01% on Friday, a signal that market sentiment is bullish among traders, but still far from the 0.06% levels seen in February or November 2021 when merchants were paying. 80% more annualized in long bitcoin, according to Lucas Outumuro, head of research at crypto analytics and data firm IntoTheBlock, in a Friday newsletter.

Outumuro wrote that current derivatives levels suggest the market is bullish, but at the same time not overheated yet, which could create grounds for the ongoing rally to continue.

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