Bitcoin Surges 20% to $87,000 as Fed Slows Quantitative Tightening

Bitcoin's price surged past $85,000 following the Federal Reserve's announcement to slow down its quantitative tightening program. This decision, which involves reducing the monthly Treasury runoff, has sparked a significant market reaction. The crypto market responded positively, with Bitcoin climbing back above $87,000, driven by the Fed's policy shift. This rally is part of a broader market movement, with Ethereum nearing $2,000 and XRP surging by nearly 8%. The Federal Reserve's decision to hold interest rates steady, coupled with a reduced growth outlook and an increased inflation forecast, has added to the market's optimism. However, one analyst suggests caution, advising investors to be mindful of potential market volatility. The Fed's move to scale back quantitative tightening starting in April has been a key driver of this rally, with Bitcoin's price above $85,000 reflecting the market's positive response to the policy shift.

Analysts have linked Bitcoin's relief bounce to the Federal Reserve's dovish tilt on quantitative tightening. The Fed's decision to scale back its quantitative tightening program starting in April has been viewed as an indirect interest rate cut. This dovish tilt is expected to improve US dollar liquidity, which is seen as extremely liquidity-positive. The Federal Reserve's decision to hold interest rates steady, coupled with a reduced growth outlook and an increased inflation forecast, has added to the market's optimism. However, one analyst suggests caution, advising investors to be mindful of potential market volatility. The Fed's move to scale back quantitative tightening starting in April has been a key driver of this rally, with Bitcoin's price above $85,000 reflecting the market's positive response to the policy shift.

Bitcoin's next move is now the focus, with analysts debating whether the relief bounce is sustainable to reverse recent losses. Some analysts have projected such an outcome, and now the next focus is on whether Bitcoin's relief bounce is sustainable to reverse recent losses. Arthur Hayes, founder of BitMEX and CIO at Maelstrom crypto fund, stated that Bitcoin might have bottomed out at $77,000 after the Fed's move. However, he cautioned of likely downside risk for stocks. From a price analysis perspective, Bitcoin 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. Bitcoin's recovery would be capped if OBV weakened after rejection at the resistance level. Put differently, it would imply weak volume to push Bitcoin forward. On the contrary, Bitcoin'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. The key test now is tonight’s US open. Will the rally sustain, or will markets reassess the risks?