BTC Price Stalls at $84K Ahead of FOMC Meeting, Analyst Warns of Another Leg Lower
Bitcoin (BTC) surged past the $84,000 mark on Monday, contributing to an overall increase in the cryptocurrency market, which saw a rise of 1.8%. The CoinDesk 20 Index, a broad market indicator, performed even better, gaining 2.4% during the same period. Ethereum’s ether (ETH) stabilized above $1,900, marking a 2.8% gain, while notable altcoins such as SUI, AAVE, ICP, and NEAR achieved increases exceeding 5%.
The rise in cryptocurrencies coincided with a continued positive trend in U.S. equities, with various key stock indexes maintaining their upward trajectory as they entered the week. Solana also demonstrated momentum, climbing 3% despite the first day of SOL futures trading on the CME (Chicago Mercantile Exchange) for institutional investors failing to significantly influence trader sentiment.
In notable developments, the governance token for Ethena (ENA) rose 7% following news of collaboration with Securitize to create a proprietary blockchain designed to connect decentralized finance (DeFi) initiatives with traditional financial systems.
However, potential warning signs were indicated by LMAX Group strategist Joel Kruger, who pointed out that the monthly S&P 500 chart suggests an impending correction, which could have adverse effects on the cryptocurrency market. Kruger emphasized the uncertainty surrounding global trade tensions and a possible slowdown in the U.S. economy, noting that “there is indeed worry stocks could fall further.”
Kruger also speculated that Bitcoin could revisit its March 2024 peak range of $73,000-$74,000 if market conditions worsen.
With the upcoming Federal Open Market Committee (FOMC) meeting, market expectations lean toward the Federal Reserve maintaining current interest rates. Coinbase Institutional’s head of research, David Duong, cautioned investors to monitor potential shifts in the Fed’s balance sheet strategy, specifically the quantitative tightening (QT) program. He suggested that the Fed might pause or conclude its QT program due to bank reserve levels approaching thresholds deemed adequate for financial stability, which are estimated at about 10-11% of GDP.
In a recent report, Duong attributed the recent downturn in cryptocurrency prices to macroeconomic anxieties and declining liquidity conditions. However, he expressed optimism, suggesting that a rebound could occur in the next quarter, potentially placing crypto prices at a bottom before heading toward new highs later this year.
