The crypto market uptick seen in the first few days of 2023 was muted after the release of FOMC minutes. The total crypto market volume fell by 2.08% in the past 24 hours. Bitcoin and Ethereum prices remain near $16.8K and $1,250 respectively.

Will the Federal Reserve’s restrictive rate hike to curb inflation in the coming months affect the expected bullish rally of Bitcoin and Ethereum in 2023?

Highlights from the FOMC minutes

Key points from the minutes of the Federal Reserve’s December FOMC meeting, released on January 4, paint an interesting picture for the crypto market in 2023.

The decision to step down to a 50 basis point hike after four consecutive 75 basis point interest rate hikes does not indicate a slowdown in inflation. Strong commitment to continue rate hikes in 2023 as the FOMC would continue to make “meeting-by-meeting decisions” and bring inflation back to the 2% target. The restrictive monetary policy is expected to push the unemployment rate up to 4.6% by the end of the year and the battle to lower prices will continue. Fed officials suggest considering the possibility of a recession in 2023 before continuing restrictive rate hikes. The Fed warns financial markets not to underestimate the central bank’s inflation cuts in an effort to restore price stability

The CME FedWatch Tool indicates a 64.2% probability of a rate hike of 25 basis points and a 35.8% probability of a 50 basis point hike in February. The possibility of a 50 basis point rate hike increased following the release of the FOMC minutes.

In addition, the US dollar index (DXY) remained above 104 on Thursday. Stock index-linked futures are trading slightly higher as FOMC minutes triggered mixed reactions in markets.

Bitcoin and Ethereum price in 2023

Wall Street banks expect a Fed pivot in 2023 as the central bank looks to continue rate hikes this year. Experts predicted the change in monetary and economic policy cycles in mid-2023.

Bitcoin price is currently trading near the $16.8K level, above the 50 EMA at $16,714. The BTC price will show low volatility due to the Bollinger Band Squeeze. After the release of the FOMC minutes, trading volume dipped lower. Thus, it indicates that the price will continue to make range moves.

Crypto analyst Michael van de Poppe predicts Bitcoin is poised to hit $17,000 ahead of the next FOMC rate hike decision on February 1. However, the BTC price may see a correction after the meeting. People looking for longs can go around $16.5-16.6K.

Bitcoin price at 4 hours time frame. Source: Michael van de Poppe

Meanwhile, Ethereum price may also have a better upside move ahead of a correction near the FOMC meeting. Ethereum is currently trading at USD 1,252, moving sideways with low trading volume.

The recent price increase in ETH is due to the renewed whale activity in Ethereum. According to Santiment, more than 600 ETH transactions worth more than $100,000 have taken place on the Ethereum blockchain in the past 24 hours.

Michael van de Poppe previously suggested investors go long Ethereum near USD 1,170 as this is the crucial support level for Ethereum.

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Varinder is a technical writer and editor, technology enthusiast and analytical thinker. Fascinated by disruptive technologies, he has shared his knowledge about Blockchain, Cryptocurrencies, Artificial Intelligence and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for quite some time and is currently covering all the latest updates and developments in the crypto industry.

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.

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