Week Ahead: Important week for Bitcoin’s 2023 rally
- Fed's interest rate decision and the FOMC press conference will set the tone for Bitcoin price and its 2023 rally.
- If this event on May 3 fails to trigger a move in BTC, investors need to wait for the NFP event on May 5.
- The $25,000 and $35,000 are the next key levels that the big crypto will eye if these macroeconomic events provide a firm directional bias.
Things are starting to get interesting for cryptocurrencies again, especially with the spike in volatility over the weekend. With two major macroeconomic events scheduled, traders can expect a lot more.
Let’s break down the events, key levels and narratives for this week.
- Fed Interest Rate decision on May 3 at 08:30 PM UTC
- Nonfarm Payrolls (NFP) on May 5 at 12:30 PM UTC
Read more: PEPE holders realise massive profits as Pepe Coin rallies 300% over the weekend
FOMC
The Fed Interest Rate decision on May 3 aka, Federal Open Market Committee (FOMC), will set the tone for this week, but the deciding factor or event will still be the NFP.
The Federal Reserve is likely going to raise the interest rate by 25 basis points and stick to its plans for curbing inflation. While this information is widely known, the event is unlikely to cause any spike in volatility. However, a deviation from the known variable, which is a 25 basis point hike, would induce a much higher spike in volatility. Say, for example, if the Fed announces a 50 basis point hike, now that would, without doubt, trigger a whiplash.
This move would be hawkish and promote a stronger US Dollar, causing the stock market and Bitcoin price to tank in the short term.
The FOMC conference is something that will cause the markets to move. Jerome Powell, the Federal Reserve Chairman’s speech after the interest rate decision, has a higher probability of causing massive spikes in volatility and triggering a directional move.
Read more: Fed likely to signal May’s hike may be the last one – Wells Fargo
NFP
The jobs report, or the NFP data release, is a key event that plays a pivotal role in determining if the directional move assumed after the FOMC conference will continue or not. According to the current forecasts, NFP is supposed to come in lower than expected if the deviation from the forecast and actual numbers is negative, but by a large magnitude, it will magnify the effects of the interest rate decision.
A reduced NFP number would suggest that Fed’s plan to curb inflation by raising interest rates is working.
Read more: Bitcoin Weekly Forecast: Fed’s interest decision will be key to BTC directional bias
Conclusion
In the past year or two, every time Fed has raised interest rates, Bitcoin price has crashed in the short-term but has ultimately rallied. If there is a higher than 25 basis point hike followed by a negative deviation in the NFP numbers, it is likely going to propel BTC to $36,000.
Also read: Bitcoin Weekly Forecast: Fed’s interest decision will be key to BTC directional bias
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Author
Akash Girimath
FXStreet
Akash Girimath is a Mechanical Engineer interested in the chaos of the financial markets. Trying to make sense of this convoluted yet fascinating space, he switched his engineering job to become a crypto reporter and analyst.
