Bitcoin
‘The stars are aligning’ for renewed Bitcoin gains, says hedge fund – DL News
- The Federal Reserve struck a dovish tone at Wednesday’s FOMC meeting.
- The recovery of the Japanese yen, along with falling oil and commodity prices, are also good signs for risk assets.
- Bitcoin is likely to bottom soon and resume its uptrend, a crypto hedge fund told DL News.
It’s been a tough few weeks for Bitcoin, but things are starting to look up on the macro picture, according to market watchers.
Some viewed Federal Reserve Chairman Jerome Powell’s tone on Wednesday as dovish. The official said that it is unlikely that interest rates will rise anytime soon, despite worrying inflation figures.
“The stars are aligning in my mind for a cooling of the ‘inflationary trade,’” said Quinn Thompson, founder of crypto hedge fund Lekker Capital. DL News.
“With Bitcoin now down more than 20% from all-time highs and most digital assets falling much worse, I believe we are at or very close to the tradable local bottom,” he added.
If it had raised interest rates, the US central bank would have made it more expensive for people and businesses to borrow money. Risky investments like Bitcoin tend to perform poorly in these conditions, while the US dollar tends to grow stronger.
The Fed not only rejected the idea of raising rates, but announced that it will end quantitative tightening – a policy that decreases the amount of money in the financial system – sooner than expected.
“We got something very close to the best case scenario,” Noelle Acheson, former head of market insights at Genesis, he wrote in his “Crypto is Macro Now” newsletter.
Meanwhile, the Japanese yen, which lost 18% against the US dollar since the beginning of the year, it also appears to be recovering – a development that Thompson attributed to US Treasury’s Janet Yellen’s meeting with Japanese officials.
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And recent inflation problems could disappear thanks to a drop in oil and raw materials prices, he said.
“For me, these are the signs that make it clear that there is coordinated action to achieve low income and the weaker dollar,” he said.
Thompson had already warned that tightening liquidity conditions threatened to trigger a liquidity crisis similar to the collapse of regional banks last spring, or the UK gilts crisis of 2022.
Tom Carreras is markets correspondent for DL News. Have any tips about Bitcoin and the Federal Reserve? Contact tcarreras@dlnews.com