Bitcoin (BTC) to Slip Below $20K Amid Strong Economic Data?
Crypto news: The ongoing R&D environment in the crypto space is reflected in the volatile trend of the Bitcoin price in recent days. While the crypto market is reeling from the uncertainty surrounding the Silvergate-related liquidity crisis, a series of stronger-than-expected US macroeconomic data is showing bearish signs in the stock market. In addition to strong economic data on various fronts, US central bank chairman Jerome Powell previously warned that the central bank could raise interest rates at a higher level than expected. In a recent one, US President Joe Biden’s 2024 budget proposal led to a drop in stock prices while also reducing the price of Bitcoin.
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The budget proposal had 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 every time the Fed delivered higher than expected interest rates. Powell’s recent warning triggered a shift in market expectations ahead of the Federal Open Market Committee (FOMC) meeting between March 21 and 22, 2023. According to the CME FedWatch Tool, target interest rate probabilities for the upcoming meeting show a more likely event of a 50 bps than an increase of 25 bps. Currently, about 71% of respondents believe there will be a 50 bps rate hike impacting the current rate hike to 5.0 to 5.25%.
While jobless claims for the week of March 4 showed signs of a slowdown in the labor market, economists expect the nonfarm payrolls data to come out as a boost to the Fed’s belief in raising interest rates higher than expected. Meanwhile, the current environment pushed the Bitcoin price below the $21,000 level for the first time since mid-January 2023. Amidst the bearish trend and high volatility, CoinGape previously reported that the estimated support levels would be $21,500 and $20,500.
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The $20,000 figure had previously served as a crucial psychological milestone for the crypto market. It remains to be seen whether the milestone will be maintained.
