Bitcoin price edged lower on Thursday despite optimism in wider markets on the back of the Fed’s interest rate decision. The flagship cryptocurrency has been consolidating above the critical level of $42,000 after briefly topping $44,000, its highest level in 20 months. Bitcoin was trading 0.71% lower at $42,569 at press time. BTC’s total market cap has increased by more than 3% over the last day to $832 billion, while the total volume of the asset traded over the same period jumped by 22%.
Economic Outlook
Bitcoin price has been trading sideways over the past few days, suggesting a pause in its recent rally towards $45,000. The premier cryptocurrency has decreased by 4% in the past week but remains 15.22% higher in the month to date. The digital asset has staged a significant recovery this year after a torrid 2022 in which a string of scandals, including the collapse of FTX, led to a market meltdown, undermining the credibility of the sector.
The crypto market has been buoyed by the Fed’s latest interest rate decision. The US Federal Reserve on Wednesday held its key interest rate unchanged for the third consecutive time, in line with market expectations. With the easing of the inflation rate, members of the Federal Open Market Committee (FOMC) voted to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%.
Additionally, the central bank indicated that three rate cuts could be implemented next year. Further rate cuts are expected throughout 2025 and 2026. While the rate cuts will make the risk assets more attractive, analysts have noted that crypto market conditions are still far from where they were in 2021. Elsewhere, the European Central Bank (ECB) and the Bank of England (BoE) are set to announce interest rate decisions this week.
Bitcoin Price Analysis
The daily chart shows that the Bitcoin price has been consolidating, suggesting exhaustion from its recent rally. Even so, Bitcoin has remained above the critical $42,000 level, flipping the $40,000 level into a support zone. The digital currency remains above the 50-day and 200-day exponential moving averages and the 100-day and 200-day simple moving averages. Its Relative Strength Index (RSI) has dropped below the signal line, highlighting cooling buying pressure.
A breach above the psychological level of $45,000 could prompt a fresh upward for Bitcoin price to the highly coveted resistance level of $50,000. However, a drop below the immediate support at $40,000 might push the price lower to $38,570.
BTC Price Chart
