- BTC relief bounce was linked to the Fed’s dovish tilt on quantitative tightening (QT).
- Some technical price indicators were yet to flip bullish for sustained BTC price recovery at the time of writing.
On the 19th of March, Bitcoin [BTC] reclaimed $85K on what analysts have linked to the Fed’s slow pace of quantitative tightening (QT).
According to crypto options trading desk, QCP Capital, the dovish tilt in QT was viewed as an ‘indirect interest rate cut.’
In its daily market review, QCP Capital stated,
“Last night’s FOMC meeting delivered the catalyst markets had been waiting for, pushing $BTC past $85K in a sharp rally. The driver? The Fed scaling back QT starting in April. Markets see this as an indirect rate cut.”
According to Jamie Coutts, chief crypto analyst at Real Vision, the QT taper would improve US dollar liquidity.
“Treasury volatility has backed right off and is now mirroring the decline in DXY from earlier this month. This is all extremely liquidity-positive.”
Source: X
What’s next for Bitcoin?
The QT dovish tilt wasn’t surprising, as some analysts had projected such an outcome. Now, the next focus was BTC’s next move and whether the relief bounce was sustainable to reverse recent losses.
For his part, Arthur Hayes, founder of BitMEX and CIO at Maelstrom crypto fund, stated that BTC might have bottomed out at $77K after the Fed’s move. However, he cautioned of likely downside risk for stocks.
“The next thing we need to get bulled up for real is either SLR exemption and or a restart of QE. Was $BTC $77k the bottom, probably. But stocks probably have more pain left to fully convert Powell to team Trump, so stay nimble and cashed up.”
From a price analysis perspective, BTC reclaimed key moving averages on the lower timeframes, reinforcing a bullish shift.
However, pseudonymous crypto trader, Income Sharks, warned that a better conviction would be OBV (On Balance Volume) clearing its overhead resistance.
“Now, to see what $BTC does at OBV resistance and diagonal resistance. Would be a clear sign of strength to see a follow-through here.”
Source: X
BTC’s recovery would be capped if OBV weakened after rejection at the resistance level. Put differently, it would imply weak volume to push BTC forward.
On the contrary, BTC’s recovery would be boosted if volume picked up at current levels.
QCP Capital added that Options market sentiment also turned positive but sustained bullish skew depended on the next few days of trading.
“Options markets reflect the shift in sentiment. Call skew is back, reversing from earlier bearish positioning. The key test now is tonight’s US open. Will the rally sustain, or will markets reassess the risks”
