Demand Imbalance Arbitrage

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Forecast Future Price Action

Bitcoin Breaks Out Above Cost-Basis Ahead of Fed Rate Decision


The world’s largest cryptocurrency, Bitcoin (BTC -0.26%), continues to hover around the all-time high of $23,000, having declined less than 1% over the past 24 hours to $23,250.[0] Last week saw a total of $117 million flow into digital-asset investment products, with nearly all of it going into funds related to Bitcoin.[1]

On Sunday evening, the value of bitcoin jumped by 3% to a peak of $23,955, before dropping back to around $23,300 on Monday.[2] As of press time, it is trading at $22,883 with a market cap of $441 billion, having given a breakout on all three realized prices for the first time in three years.[3]

At 2 pm Eastern Standard Time (EST) on Wednesday, February 1st, 2023, the Federal Reserve’s interest rate adjustment will be revealed, and the world will be paying close attention.[4] The announcement of the new rate is scheduled for 2 p.m.[5] Wednesday, Feb. 1 at ET.[4] The CME has estimated a likelihood of 99.9% that interest rates will be raised by 25 basis points, from 4.5% to 4.75%.[5] Interest rate futures indicate that the Federal Reserve’s current rate increase period could conclude in June.[5]

On Friday, two major upturns occurred in the Bitcoin rally that began in early 2023.[6] Patterns in the crypto options market suggest another jump could come, with the cryptocurrency up more than 40% in four weeks and the BTC/USD reaching highs of $23,955 last week.[6]

The recent surge in Bitcoin price action has resulted in an initial breakout above all three cost-basis for the first time since the 2018/19 bear market and the March 2020 Covid crisis.[3] If prices remain above these key psychological levels for a prolonged period of time, it would be considered a positive sign.[3] Additionally, Ethereum developers had on Monday deployed the shadow fork ahead of the Shanghai hard fork due in March 2023.[7]

The initial assumption is that the Federal Reserve will raise interest rates by a quarter of a percent and declare that further increases are necessary.[8] As a result, any increase beyond this should be beneficial for the dollar and detrimental for Bitcoin.[8] Should the Federal Reserve deliver as anticipated, a short-term surge powered by hype could push Bitcoin past $25.4k.[5]

0. “Why Bitcoin, Ethereum, and Solana Are Down This Morning” The Motley Fool, 30 Jan. 2023,

1. “Crypto Markets Today: Bitcoin Dips Below $23K Ahead of Fed’s Meeting” Yahoo Finance, 30 Jan. 2023,

2. “Cryptos Falter But Market Cap Holds Above $1 Trillion” RTTNews, 25 Jan. 2023,

3. “Bullish for Bitcoin and the whole industry: GDP rises 2.9% in fourth quarter – This is yet to come” Crypto News Flash, 27 Jan. 2023,

4. “Bitcoin And Crypto This Week: Here’s What Will Be Important” Bitcoinist, 30 Jan. 2023,

5. “FOMC: How Will Bitcoin React to a 25 BPS Hike?” Watcher Guru, 30 Jan. 2023,

6. “Bitcoin Price Holds at $23,000 as Crypto Traders Brace for Fed Decision” Barron’s, 30 Jan. 2023,

7. “Cryptocurrencies Stay Bullish As Bitcoin Heads for $25000, Ahead of FED Meeting” FX Leaders, 30 Jan. 2023,

8. “The Federal Reserve meeting looms large as the Fed’s hawkishness may send Bitcoin lower.” CoinJournal, 30 Jan. 2023,

Forecast Future Price Action
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