Key Points
- Bitcoin (BTC) hit $105K following the Fed’s decision to pause interest rates.
- Key short-term levels to watch are $108K, $110K, and $97.5K.
Bitcoin (BTC) experienced a moderate reaction to the recent Fed rate decision, reclaiming the $105K mark.
On January 29th, the Fed held the interest rate steady at 4.25%- 4.5%, attributing the decision to elevated inflation.
Fed’s Response to Inflation Concerns
Despite a ‘hawkish stance’, Jerome Powell, the Chair of the Federal Reserve, did not express strong bearish sentiments during the press conference. He even hinted at the possibility of rate cuts even if the 2% inflation target is not met.
The market had anticipated the rate pause, and the mixed signals from Powell’s press conference kept BTC within the short-term $100K-$105K range.
Interestingly, President Donald Trump disapproved of the Fed’s decision to pause the rate and criticized Powell. He proposed addressing U.S. inflation by increasing energy production to reduce the prices of goods.
The market’s attention will now turn to key inflation data and the PCE (Personal Consumption Expenditures) price index, which is set to be released on January 31st.
Impact of U.S. Inflation Report on BTC
Matt Mena, a crypto strategist at 21Shares, shared his thoughts on how the PCE price index report could impact BTC. He stated that investors are waiting for confirmation that rate cuts are imminent. Until then, BTC is likely to consolidate within its current range, with $105K as the key breakout level and $108K as the next major upside target if Friday’s data favors risk assets.
Mena’s projections align with the 2-week liquidation heatmap chart from Coinglass.
In most scenarios, high liquidity pockets act as price magnets. In a liquidity sweep scenario, BTC could target the immediate liquidity levels (bright yellow) at $108K and $110K.
Conversely, bearish sentiment from the inflation data could pull BTC towards the lower side pocket of liquidity at $97.5K.
