Bitcoin rises after the Fed. Why another macro force could be key for crypto.

“It felt like a mixed result for crypto investors. While the language on future rate hikes was softened, the Fed left the door open by saying that future decisions will be macro data dependent,” said Michael Safai, managing partner at crypto trading firm Dexterity Capital.

The dramatic rise in interest rates over the past year has been a major headwind for digital assets, accelerating Bitcoin’s spiral down from its record high in late 2021 near $69,000. But in 2023, the narrative that the Fed will become more accommodative – possibly even cutting rates this year – has fueled Bitcoin’s spectacular 70% rally this year, clearly outperforming

Dow Jones Industrial Average

and

S&P 500.

With the Fed rate hikes taking center stage, expectations are gathering around the idea that it could take shockingly hot inflationary pressure for the Fed to pull off another rate hike, putting next week’s April consumer price index (CPI) in the spotlight. The April jobs report, due on Friday, is likely to be another near-term catalyst, given that the closely watched non-farm payrolls number consistently moves both stocks and cryptos as traders analyze labor market data to read into Fed policy.

“Traders have paid more attention to Fed meetings than CPI data releases in recent months. It could flip-flop if traders believe inflation readings will herald the Fed’s next move,” Safai said.

Next Wednesday, the CPI will be launched, and Thursday will bring another important calculation, the producer price index (PPI).

While macroeconomic factors will remain influential for movements across cryptos, other market observers continue to focus on the regulatory backdrop for digital assets in the United States. Lawmakers and regulators have taken an increasingly tough stance on crypto, targeting influential trading platforms such as Binance and Coinbase Global (ticker). : COIN) this year, shaking confidence in the future of digital assets in a critical market.

“Bitcoin remains entrenched, unlikely to rally above the $30,000 level until the US gets some regulatory clarity,” said Edward Moya, analyst at broker Oanda.

Bitcoin reclaimed the psychologically important $30,000 level last month for the first time since last June, as the digital asset selloff accelerated into a brutal crypto bear market. While prices have moved as high as around $31,000, Bitcoin has struggled to consolidate gains above $30,000 and has not consistently traded above this mark since April 19.

From a technical perspective, Bitcoin’s pullback above $29,000 should provide some short-term tailwind, with more gains putting $30,000 in range.

“Bitcoin bulls have pushed the price to $29,000, consolidating above the 50-day moving average,” said Alex Kuptsikevich, an analyst at brokerage FxPro. “This is an essential signal of an uptrend in the medium-term. Short-term attention is focused on the $29,400 area, where Bitcoin fell earlier this month, and resistance runs through the local highs of mid-to-late April.”

Beyond Bitcoin,

Ether

-the second largest crypto jumped 2% to $1,900. Smaller cryptos or altcoins were similarly strong, with

Cardano

and

Polygon

each up 2%. Memecoins were more muted, med

Dogecoin

and

Shiba Inu

rises around 1%.

Write to Jack Denton at [email protected]