“We expect a drop of up to 24,500 in Bitcoin”
The US Federal Reserve (Fed), which has been applying interest rate hikes for the past 15 months in order to rein in high inflation, has kept the policy rate constant between 5 and 5.25 with its decision yesterday.
In the text of the Fed’s decision on the interest rate decision, “Inflation remains high. The statement “The Committee continues to closely monitor inflation risks” may raise concerns that interest rates may be increased again by the markets in the future. Speaking privately to Kriptokoin.com, economist Erkan Öz said, “The Fed left the interest rates unchanged last night, but gave signals that it might increase later on. Inflation concerns were mentioned. Not only crypto but also other markets welcomed this decision unpleasantly. Because it will be a strange situation: It keeps it stable now, but there was a situation where it could increase in the future,” he says, adding: “There is already a regulatory pressure on cryptos. There is also a fear of whether these regulatory pressures will continue. When the two of them came together, it was an unpleasant situation.”
“The scenario that we will probably increase the interest rates in the future was not welcomed”
Öz comments on the market’s expectation of a rate cut from the Fed as follows: “A rate cut is not necessary. When we look at the previous experiences, if the Fed has started to cut interest rates, there is usually a perception of something very bad in the economy. If a roadmap was announced that would not increase the interest rates further, we could have accepted it positively. But we are releasing it now, we will probably increase it in the future, the markets did not take it very positively.”
On the other hand, it is a fact that the positive correlation of the crypto market with the technology exchange Nasdaq, which has been going on for about a year and a half, has lost its effect recently. Öz says: “The reason for the deterioration of correlation in the Nasdaq and crypto market is the regulations. Before that, there was no break from a very extreme correlation. The issue of regulation needs to be clarified one way or another.”
No signals were given to lower interest rates in 2024
Commenting on the impact of the Fed’s interest rate decision on the crypto market on her personal YouTube channel, Analyst Beste Naz Süllü said, “In the interest rate decision text, the following is remarkable: He says that the economy is growing at a moderate level, job gains continue to increase and at the same time inflation is still climbing. It is stated that it will continue until the targets in the inflation and employment market are met. The expected range in interest rates for 2023 has remained the same, but the situation is as follows: The median expectation of the Fed funding rate in 2024 has been increased from 4.3 to 4.6. What does it mean?” He says and adds: “He says it will be difficult to predict that interest rates will be lowered in 2024.”
“Obviously core inflation has not fallen”
Stating that the situation in question is not bad for the crypto market, however, Süllü said, “The Fed may not continue to increase interest rates, but it will continue to keep interest rates high. This put downward pressure on Bitcoin in the first place. In the inflation data released on Tuesday, there was no decrease in core inflation. There is even an increase in some core items (clothing, real estate, used car prices, etc.), let alone the decline. The Fed’s problem is this: I raise interest rates, but can I reduce inflation with these increases? The area affected by central banks is core inflation, adjusted for food and energy prices. Obviously, inflation has not decreased,” he says.
“We expect a drop of up to 24,500 in Bitcoin”
Süllü said that “we are in a slowly increasing ascending channel” in Bitcoin since June 10, from the level of 25 thousand 400 dollars, and continues: “This ascending channel is our only tree in the forest. In order to look at the forest in general, we need to look at the daily periods. Where will we come in Bitcoin with Bitcoin breaking below 25 thousand 800? Currently, we expect a 5.5 percent decrease until 24,500.”
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