Over the past 24 hours, the market has witnessed a significant recovery in the price of Bitcoin, which has soared 10% from a daily low of $60,805 to a peak of $68,250. This notable price movement can be attributed to several key factors, including yesterday’s Federal Open Market Committee (FOMC) meeting, a notable change in Coinbase Premium, and Bitcoin’s technical breakout of a downtrend channel.
FOMC Meeting #1: Jerome Powell’s Dovish Remarks Fuel Optimism
As reported yesterday, the macro environment has come back into focus for Bitcoin and crypto following hotter-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) inflation data in the US. Investors appeared to have de-risked their positions ahead of the FOMC event. However, investors received a favorable outcome.
The crucial point for Bitcoin’s recovery dates back to the Federal Reserve’s last FOMC meeting, where Chairman Jerome Powell gave a speech that the market interpreted as dovish. The Fed’s stance, especially in light of recent inflation data, has reassured investors.
Crypto Analyst Furkan Yildirim offered a summary of the FOMC’s key points: “’Dot Plot’ projections show that the median employee expects cuts of three-quarters of a percent in 2024 (…) The FOMC voted unanimously to leave the federal funds rate unchanged (…) The median forecast for PCE Inflation remains unchanged at 2.4% for 2024 (…) Authorities also raised forecasts for where they see interest rates in the long term.”
The reaction to these announcements was immediately bullish across traditional financial markets as well as Bitcoin and crypto. QCP Capital, a Singapore-based crypto asset trading firm, highlighted the peaceful nature of the FOMC position: “1. In Powell’s press conference speech, he was not concerned about the high inflation numbers in January and February 2. In the dot plot, more members changed their projection to 3 cuts in 2024 (9 members vs 6 in December).”
Analyst Ted (@tedtalksmacro) even more emphasized the positive implications: “FOMC Summary: – 3x rate cuts happening this year despite inflation remaining above 2% (Fed expects core PCE to be 2.6%). Updated growth prospects. Send this.”
#2 Coinbase Premium Turns Green: A Sign of ETF Spot Demand
Coinbase Premium’s move into positive territory can be identified as another critical factor influencing Bitcoin’s price movement. While yesterday ETF Flows were negative again for the third consecutive day, Bitcoin Coinbase Premium there was a glimmer of hope that spot Bitcoin ETFs will push the price further.
CryptoQuant analyst Maartunn commented: “Coinbase Premium is positive again. It’s about +$50. Beautiful.” Coinbase Premium is crucial to the price of BTC in recent months as it reflects demand for spot Bitcoin ETFs before the actual numbers are released a day later. Coinbase custody eight of 11 as a result, detect Bitcoin ETFs or about 90% of Bitcoin ETF assets. Thus, the Coinbase premium is crucial for a continued recovery.
Coinbase Premium is positive again. It’s about +$50. Beautiful 😁 https://t.co/YJhYLdbipc pic.twitter.com/Hd3xXsg7Bq
-Maartunn (@JA_Maartun) March 20, 2024
GBTC had outflows worth $386.6 million yesterday. Notably, Blackrock had just $49.3 million in inflows, Fidelity had $12.9 million. This was one of the weakest inflow days for the major Bitcoin ETFs so far – a huge disappointment.
But renowned crypto analyst WhalePanda commented: “We moved forward after the FOMC and overall it was better than what boomers expected. The price is now falling on news of negative flows, but I think they are in for a good surprise tomorrow.”
Yesterday’s ETF flows were negative again for the third in a row.$GBTC had outflows worth US$386.6 million.
Blackrock with just US$49.3 million in inflows and Fidelity with US$12.9 million.I suspect the real flows will only be visible in tomorrow’s numbers.
We pump… pic.twitter.com/WVTntqG1by
– WhalePanda (@WhalePanda) March 21, 2024
#3 BTC price breaks out of downtrend channel
On the technical side, Bitcoin’s breakout from a downtrend parallel channel caught the attention of traders and analysts alike. Daan Crypto Trades highlighted the importance of this movement on X (formerly Twitter): “Bitcoin has tested its 4H 200MA/EMA and has been holding well there and breaking out. I’m still following this channel which will dictate BTC’s next move.”
#Bitcoin It tested its 4H 200MA/EMA and it has held well and has broken out.
Still watching this channel that will dictate $BTCnext step.
Bulls would like to see this consolidate above and not fall back into the channel. pic.twitter.com/94etUo6YAR
– Daan Crypto Trades (@DaanCrypto) March 20, 2024
The chart shared by Daan shows that BTC price has been consolidating in a parallel downtrend channel for over a week. Yesterday’s rally catapulted the price above the channel. A new test is currently being carried out. If this is successful, the price of BTC could rise further north.
At press time, BTC traded at $67,397.
Featured image created with DALLE, chart from TradingView.com
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