Bitcoin's correctional rise slowed down. Now, investors are closely monitoring actions of the US Fed, expecting results of the 2-day meeting.
In fact, there is a connection between the US Fed and bitcoin. It turned out that constitutional investors, who pushed bitcoin to its recent highs, were trying to find an alternative to the weakening fiat money. The Fed also contributed to the situation, invading the market by a weak US dollar.
At the moment, the situation is changing. The vaccination process is becoming faster, a lot of countries are withdrawing lockdown measures, and economies are recovering. The Bank of Canada was the first to provide traders with hawkish signals, announcing that it would raise its key interest rate one year earlier than expected.
Now, it is Fed's turn. Although the regulator will hardly change the asset-purchasing program and the key interest rate, market participants are waiting for a change in its rhetoric. Will Jerome Powell say that the pace of economic recovery is high enough to withdraw stimulus measures earlier than expected? In fact, the monetary policy document may even contain hints about an earlier tightening.
As a result, hawkish hints may lead to a decline in bitcoin, whereas the US dollar will rise. In this case, bears are likely to control the crypto market.
Financial assets and bitcoin significantly benefited from the ultra-loose monetary policy. Hints about earlier tightening of monetary policy may cause a downward correction.
At the same time, bitcoin may skyrocket if the US Fed keeps its monetary policy unchanged. Most analytics suppose that the regulator will keep everything unchanged.
Judging by the technical analysis, BTC may got stuck between the levels of $50,000-$60,000.
The 100% Fibonacci expansion level ($55,793.92) stopped the first cryptocurrency that was against our expectations. Now, this level acts as the upper limit of the consolidating range. The support level is located at $53,980.47 (a lower blue dotted line).
In this case, after the Fed's meeting, the bitcoin/dollar pair may sharply leave the range.