Before the Critical FED Interest Rate Decision, Two Analysts Predicted the Direction of Bitcoin Price – “If There Is A Correction, It May Go...

Bitcoin (BTC) climbed above $84,000 today, extending its upward momentum amid a broader rally in risk assets. The rally coincided with another positive day for U.S. stocks, providing a favorable backdrop for cryptocurrencies.

Despite the bullish price action, some analysts remain cautious. Joel Kruger, strategist at LMAX Group, warned that the monthly chart of the S&P 500 is pointing to a potential correction in U.S. equities, which could negatively impact cryptocurrencies.

“Given the state of global trade tensions and concerns about a slowdown in the U.S. economy, there is concern that stocks could fall further at a time when it is increasingly unclear how much more accommodation the Fed can provide,” Kruger said.

Kruger also noted that if there is a broader correction in the market, Bitcoin could return to its March 2024 highs of around $73,000-$74,000.

Investors are closely watching this week's Federal Open Market Committee (FOMC) meeting, with expectations that the Fed will keep interest rates at current levels. However, analysts are watching for potential changes to the central bank's quantitative tightening (QT) program that could impact market liquidity.

David Duong, director of research at Coinbase Institutional, suggested that the Fed could pause or end the QT program as bank reserve levels approach the 10-11% of GDP threshold deemed necessary for financial stability.

Duong attributed the recent crypto sell-off to macroeconomic concerns and worsening liquidity conditions. However, he believes that these conditions could improve in the coming quarters and provide some support for asset prices.

“Cryptocurrency prices could find bottoms in the next few weeks before hitting new highs later this year,” Duong said.

*This is not investment advice.