Bitcoin’s Most Haunting Bearish Indicator Returns

Bitcoin Jerome Powell
Bitcoin Jerome Powell

NOIDA ( — Bitcoin price painted a new all-time high on March 5. The prime crypto token now faces one of its worst bearish indicators: the Fed rate cuts, or rather, the lack of it.

Federal Reserve Chairman Jerome Powell testified to a House panel on March 6 that the US central bank had no plans to rush into rate cuts. Powell said the policy-making body would wait for inflation to decrease further before deciding on rate cuts.

Bitcoin Fed Rate Powell
BTC price fell following Powell’s statement. Source: CoinStats

As the statement hit the news, BTC price started to drop, correcting slightly from the day’s high near $67,650.

Historically, higher interest rates strengthen the US dollar, potentially making investments in assets like Bitcoin less attractive than yield-generating assets. Hence, the Fed chief’s decision could decrease Bitcoin’s price as investors turn to other avenues like Gold and bonds.

Need More Confidence On Inflation, Says Powell

The Federal Reserve Chair indicated the regulatory body was likely to adopt a cautious approach to interest rate adjustments.

Powell indicated that the Fed is prepared to raise rates further if necessary and maintain a restrictive policy level until it is confident that inflation is sustainably moving toward the 2% target.

Powell mentioned that the Federal Open Market Committee (FOMC) is proceeding carefully, balancing the risks of under-tightening and over-tightening.

Bitcoin Fed Rate Powell
Fed Chief Powell needs more confidence to cut interest rates.

Furthermore, the Fed chief indicated that rate cuts might be more appropriate later this year, contrary to market speculation that they would occur sooner.

The statement remains in line with Powell’s speech early in February this year, when he said it was unlikely that the “committee will reach a level of confidence by the time of the March meeting” to cut interest rates.

However, market participants took a different view of Powell’s speech. The US dollar slipped to a one-month low against the euro as traders noted that Powell did not deny the possibility of rate cuts this year.

Bitcoin Price Resumes Rally, But Will It Last?

Higher interest rates generally strengthen the US dollar and can lead to a reduced appetite for riskier investments like cryptocurrencies, including Bitcoin.

Hence, if investors anticipate that the Fed will keep rates higher for longer, some investors could shift towards safer, yield-generating assets.

Bitcoin Fed Rate Powell
BTCUSD price chart. Source:

Bitcoin price resumed rallying after a slight stutter following Powell’s statement, suggesting a generally positive outlook from investors.

The Bitcoin price has rallied strongly this year, fuelled by strong demand for spot Bitcoin ETFs and the prospect that global interest rates may fall. However, the token could see corrections if the interest rates remain high.

Independent market analyst “Crypto Capo” said in his Telegram channel that a BTC price correction of 25-30% was not unlikely. On March 5, the analyst said it was one of the “worst times to be bullish” on Bitcoin.

Crypto Capo's Bitcoin analysis.
Crypto Capo’s Bitcoin analysis. Source: Telegram

However, Capo accepted that his outlook was not the popular opinion, stating

It seems I’m the last bear standing.

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