Last week, the cryptocurrency market saw a good drop of 3.16% from a Market cap of $1.139 trillion of $1.103 trillion. Crypto markets fell more than the US indices in percentage terms. Most indices were moving sideways for most part of the week but in the hours leading up to the FOMC meeting minutes release, a strong pull back seen across the markets. The commentary from FED members seems to be largely divided but conveyed no signs of rate cut for the year. How the impending decision of US debt default debacle is handled will be a great contributor to the Fed’s upcoming actions.
Bitcoin Price Analysis:
The bears effectively defended the resistance region at $27,812, but they were unable to lower the price below the critical support level of $25,450. This indicates that bulls are buying on modest dips. As long as the price remains above the current support of $26,550, the bulls will press on to the resistance region around $28,144. If they are successful, it will indicate that the markets have rejected the lower levels. This might raise the chances of a rally to the $28,800 resistance area. This level may once again prove to be a significant challenge for the bulls.
Contrary to the above bullish thesis, if the price goes down and breaks below $27,812 again, it will show that supply is higher than demand. Then, the BTC/USDT pair could fall to a crucial level between $25,450 and $24,719. This week, the number of macro events will go up a little bit. On May 26, an array of economic data will be released, including the Personal Consumption Expenditures (PCE) Index. This is a key part of how the Fed sets interest rates, and its conclusions may drastically alter how the market thinks rates will change.
Fundamental Updates
The FOMC meeting minutes that were released on 24th May conveyed the ongoing divide amongst Fed members. Amidst this , some firm indications were conveyed like no rate cuts for the rest of the year. The commentary conveyed that the rate hikes aren’t totally ruled out yet and simultaneously the FedWatch tool for interest rate hike saw an increase in the 25bps hike probability.
The banking crisis, US debt default conundrum will continue to be the major points of consideration for the Fed along with other macro economic factors.
The U.S core PCE index has been one of the most volatile indicator in terms of direction but it has recently stabalized to a consistent 0.3% maek on m/m basis. The next data print of May 26th is expected to be on the same mark of 0.3%. Although the bigger challenge in near term is the decision around U.S debt Ceiling, any number higher than this can cause the crypto markets to dip further.
Bitcoin returns were -4.1% for this week. The Alpha Blue Chip Focused Strategy returns were -3.25% during the same period (18 MAY – 25 MAY). The Top Cap Digital Assets Strategy and Arbitrage Opportunities and Balanced Strategy returns were -1.47% and 0.71%, respectively.
