The Federal Reserve’s hold on the bitcoin price may be back in play following the central bank’s latest policy update. Bitcoin’s price action was generally unchanged this week, even after the Fed meeting, where the central bank hit pause on rate hikes but indicated it could hold rates at higher levels for longer than previously thought. The cryptocurrency is currently at the lower end of the tight range its been stuck at for months between $25,000 and $30,000. However, unlike the March and June rallies that followed oversold conditions, bitcoin has been trading sideways since its last major drop . “This move in rates is impacting long duration, speculative assets and bitcoin definitely falls into that camp,” Rob Ginsberg, an analyst at Wolfe Research, told CNBC. “Oversold conditions are a great indicator that you should rebound – you get concerned when [prices] don’t respond.” BTC.CM= YTD mountain Bitcoin has struggled to rebound from its Aug. 17 drop “[When] rates break out to new cycle highs … it wouldn’t surprise me if we take out [the] $25,000 support level … and then something starts to break in the system,” he added. “That’s when the Fed pivots and that’s when you see a violent rotation back into risk.” Last year’s crypto winter was unlike others before it in that the Federal Reserve and its inflation fighting rate hiking campaign had perhaps the biggest influence over bitcoin’s price action. Bitcoin is now up about 60% in 2023, but the long-anticipated developments in regulation and the bitcoin ETF space that were expected to be positive catalysts haven’t propelled price higher. Apathetic investors are on pause as they await the next moves from the Fed. If bitcoin breaks above $28,000, it could continue to as high as $32,000 in the short term, Ginsberg said. However, he said it’s not very likely as the market’s recent deterioration would have to be a head fake. If bitcoin takes out the $25,000 support level, it could fall further still to between $20,000 and $21,000, according to Ginsberg. “Real rates are moving higher, and they’re breaking out to cycle highs,” he said. “That to me is still the biggest headwind for speculation and crypto in particular. So you need to see that breakeven and work lower to get people to come back into that part of the market.”
This story originally appeared on CNBC
