Ahead of FOMC: Why Bitcoin Price May Rally Towards $10K

Bitcoin price is trading cluelessly ahead of the FOMC 2-day meeting starting Tuesday. However what could likely help BTC sustain its bullish bias above $10,000 in June 2020?

June 9 2020 | AtoZ Markets – The Federal Open Market Committee (FOMC) meets Tuesday and will announce its latest monetary policy decision on Wednesday. While markets expect short-term interest rates to remain steady at near zero, investors will be watching Fed Chairman Jerome Powell’s statement for clues over the central bank’s next move.

Bitcoin price spiked towards $10,000 but declined due to profit-taking sentiment

Yesterday, Bitcoin price rallied near its $10,000 critical technical resistance level hours after the S&P 500 recouped all its yearly losses.

However, the flagship cryptocurrency’s uptrend ran out of steam before hitting $9,900 level. Day traders used the unexpected bullish run to withdraw near-term profits. As a result, Bitcoin dropped to as low as $9,567 ahead of midnight Tuesday. Later into the intraday session, BTC price rebounded but was trending flat in a tight sideways range.

Bitcoin’s pump-and-dump attracted inspirations from a partially similar move in the U.S. stocks. The benchmark S&P 500 jumped 38.46 points, or 1.8%, to turn positive for the year. Sometime in March 2020, the index was more than 30% down from its historic high. Currently, the index is now in green by 0.05%.

Nevertheless, S&P 500 related future looked steady ahead of the New York opening bell of Tuesday. They hinted to open the 0.16% below zero, thereby reaching an erratic parity with the sentiments in the Bitcoin market. But the reason why the S&P 500 and Bitcoin has gone flat on Tuesday is due to the FOMC’s two-day meeting.

“The Committee will likely focus on successfully implementing their already-announced credit facilities and continue discussions on the longer-term outlook for asset purchases and forward guidance,” said Nomura economist Lewis Alexander in an investor note.

How FOMC meeting impact Bitcoin

Federal Reserve on Wednesday is expected to maintain rates between 0 and 0.25% to boost lending in a recovering U.S. economy. It has also designed aggressive quantitative easing programs that are expandable beyond its current cap of $7 trillion.

Mr. Powell’s focus on keeping these policies intact may demean the U.S. dollar and allow investors to move further into the risk markets. Part of that money could reach Bitcoin as investors hunt for better-yielding assets to hedge against an overbought U.S. stock market.

Consequently, Bitcoin could see small negative adjustments as the S&P 500 corrects lower, due to its erratic correlation. Nevertheless, BTC trading above $8,600-9,000 could have it retest the $10,000-resistance. At the time of writing, Bitcoin is trading above the $9,700 mark.

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