© Reuters.
Investing.com – It looks like the market has yet to face a long lean period. After Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), declared that except for BTC, all other cryptos were securities, there is growing evidence that a tightening of the is imminent.
Atlanta Fed Chief Raphael Bostic remarked on Wednesday that the central bank had already resorted to easing monetary policy too soon. That was in the 1970s and it had taken 15 years to bring the to the two percent target:
“Such a situation must not happen again, so we have to fight inflation now,” Bostic said. The key rate must be raised to 5%-5.25% and remain there “well beyond 2024”.
Minneapolis Fed Director Neel Kashkari is calling for even more drastic measures. He mentioned for the next one and the fact that the final interest rate will ultimately have to be higher than 5.4% to correspond to the current situation.
“I think my colleagues agree with me that the risk of insufficient monetary policy tightening is greater than the risk of excessive monetary policy tightening,” Neel Kashkari told a conference in Sioux. Falls, South Dakota.
But until the Fed changes monetary policy, bitcoin cannot begin a sustainable rally towards its all-time high of $68,990. It simply lacks liquidity, which is only available in sufficient quantity with cheap central bank money.
On the monthly chart, we can see how the rally gained momentum in early 2021 with the monetary easing measures taken globally in the context of the Corona pandemic. Later in 2021, the rise in inflation was a first brake, but the US central bank assured that the price increase was only temporary and that there was no need to change the policy. monetary.
In November, however, the Fed was forced to end the cheap money phase. And as interest rates continued to rise amid persistent inflation, bitcoin was retreating visibly.
At the start of 2023, it was able to save above the 78.6 percent Fibo retracement, but the February Doji candle (candle without a body) is already signaling market uncertainty about overall conditions. future.
The hope that the tightening of monetary policy will end soon gives way to the disappointing observation that the measures taken so far are not enough to properly cool the economy and bring inflation under control. The risk of another BTC/USD double-digit decline is increasing.
By Marco Oehrl