Crypto News: The ongoing FUD environment in the crypto space is reflecting in the volatile trend in Bitcoin price in last few days. While the crypto market is reeling from the uncertainty around Silvergate related liquidity crisis, a series of stronger than expected US macro economic data is showing bearish signs in the stock market. In addition to strong economic data on various fronts, US Federal Reserve chair Jerome Powell earlier warned that the central bank could raise interest rates on a higher than expected range. In a latest, US President Joe Biden’s 2024 budget proposal led to fall in stock prices while also bringing down Bitcoin price.
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The budget proposal had some bad news for crypto traders, who are deprived of tax subsidy benefits. This is expected to deliver an estimated $24 billion, the US administration said. Meanwhile, the bearish sentiment is likely to continue for the next two weeks, until the Fed’s FOMC delivers its interest rate decision.
‘Higher Than Expected Interest Rate’
In the latter part of 2022, crypto prices followed the downward curve whenever the Fed delivered higher than expected interest rates. Powell’s recent warning triggered a shift in market expectation ahead of the Federal Open Market Committee (FOMC) meeting between March 21, and 22, 2023. As per the CME FedWatch Tool, the target rate probabilities for the upcoming meeting show a more likely event of a 50 bps hike than a 25 bps increase. Currently, about 71% of respondents believe there will be a 50 bps rate hike affecting the current rate climbing to the the 5.0 to 5.25% range.
While the jobless claims for the March 4 week showed signs of slowdown in the labor market, economists expect the nonfarm payrolls data to come out as reinforcement to the Fed’s belief to raise interest rates higher than anticipated. Meanwhile, the current environment pushed Bitcoin price to below the $21,000 level for the first time since mid-January 2023. Amid the bearish trend and high volatility, CoinGape earlier reported that the estimated support levels were to be $21,500 and $20,500.
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The $20,000 figure had in the past acted as a crucial psychological milestone for the crypto market. It remains to be seen if the milestone will be sustained.