Crypto – U.S Market Correlation Continued on Friday, Delivering Bitcoin (BTC) Support
It was a bullish session for Bitcoin (BTC) and the broader crypto market on Friday. Market jitters over FED monetary policy and hawkish FOMC member chatter from Thursday abated at the end of the week.
On Wednesday, U.S inflation looked to have change the trajectory of interest rates. A number FOMC members spoke of the need for possibly 4 rate hikes to curb inflation on Thursday. In December, the U.S annual rate of inflation had hit the highest level since 1982.
Hawkish chatter had left Bitcoin in the red in response. The moves across the crypto market were aligned with those of the U.S equity markets, which also suffered heavy losses on the Day. Bitcoin fell by 3.02% on Thursday, with the NASDAQ ending the day down by 2.51%.
Greater interest in movement across both the U.S equity and crypto market comes following concerns highlighted by the IMF this week over interconnectedness between the two markets.
Movement across the markets on Friday, however, were positive. The NASDAQ rose by 0.59% with Bitcoin ending the day up by 1.19%.
Coming off the back of the shift in market sentiment, the Bitcoin Fear & Greed Index increased from 21/100 to 23/100. While up on the day, a level in the red and close to or at zero indicates investor fear of further price declines. A move back through to 30 levels, mid-orange, would be a buy signal on a trend basis.
For the Day Ahead
With the global financial markets closed, there are no key drivers for the markets to consider over the weekend. The lack of influence from the U.S markets will leave investors to consider recent regulatory activity and what impact a more aggressive FED move on interest would mean for the crypto markets.
At the time of writing, Bitcoin down by 0.16% to $43,019. A move back through Thursday’s current week high $44,443 would bring $45,000 levels into play for the first time since 5th January. With sentiment across the crypto market still bearish, however, plenty of support would be needed for a breakout from $43,500 levels.
A fall back to sub-$42,000 could see Bitcoin test support at $40,000 before any recovery.