100
That Bitcoin (BTC) has been correlating with traditional markets has been one of the striking aspects of the current cycle. The ongoing crypto bear market cycle has been strange in many ways. One such trend is the way in which there is a drop in short positions when approaching a potential Bitcoin bottom. In this context, the U.S. Federal Reserve is determined to control inflation by continuing to rise interest rates. However, estimated figures show that a Bitcoin breakout could happen if Fed interest rate easing begins.
Historically, a prolonged price downtrend resulted in BTC reaching its bottom. But, in the current environment, the top cryptocurrency has on several spells remained on the same low range. This stagnation led to a drop in BTC whale accumulation. In fact, recent data shows that the BTC whales are holding the lowest supply in the last three years. In contrast, the number of addresses holding 0.1 to 10 $BTC saw a significant rise over the same period.
Bitcoin Breakout Imminent With Fed Actions?
After a spell of correlation with the major traditional market assets, BTC retraced a bit last month. Bitcoin has outperformed all the market assets except the dollar strength index (DXY). Subsequent Fed rate hikes have impacted the market assets as well as Bitcoin in recent months. According to macro experts, there could be an easing of Fed rate hike in early 2023. Jurrien Timmer, the director of global macro at Fidelity, predicted that easing would go on for around two years starting with early 2023.
“When will the Fed back off? The forward curve now suggests a terminal rate of 4.93% by early 2023, followed by 130 bps of easing over the subsequent two years.”
- Bitcoin
- Fed
