Bitcoin price prediction ahead of the FOMC minutes

Bitcoin (BTC/USD) price is struggling ahead of the upcoming Federal Open Market Committee (FOMC) minutes. The coin is trading at $45,311, which is lower than last week’s high of more than 48,000. 

FOMC minutes ahead

Bitcoin has been in a tight range in the past few days as the remarkable rally that happened recently takes a breather. 

This performance is likely because of the multiple warnings being sent by the bond market. As you can see below, the yield curve has been in a strong downward trend in the past few weeks. This decline has led to an inversion of this curve, which is the first time it has done that since August 2019.

The yield curve is one of the most accurate indicators of recessions globally. It inverted in August 2019 while a recession happened a few months later due to the Covid pandemic. The curve also inverted in 2007, leading to a recession in 2008. Therefore, there is a high likelihood that a recession will happen in 2022 or 2023.

The performance of the yield curve is mostly because of the Federal Reserve. In the past few weeks, most Fed officials have warned that they will embrace a more hawkish tone in the coming meetings. The bank has already hiked interest rates by 0.25% and there is a possibility it will hike by 0.50% in March.

Further, the bank is expected to start implementing quantitative tightening (QT) in May. This will be a major reversal from what the bank has been doing in the past few years. Through its quantitative easing program, the bank has been adding to its balance sheet, which stands at over $9 trillion.

Therefore, these actions explain why the Bitcoin price is struggling. In fact, its performance mirrors that of other assets like stocks. Dow Jones and Nasdaq 100 futures have declined sharply in the past few days.

Bitcoin price prediction

The daily chart shows that the BTC price has been in a strong bullish trend in the past few days. In this period, the coin has managed to move above the 61.8% Fibonacci retracement level. It has also risen above the 25-day and 50-day moving averages.

 A closer look reveals that it has formed a break and retest pattern by moving to 45,504. Therefore, there is a likelihood that the coin will maintain its bullish trend in the coming days.

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