Bitcoin Traders Vow to Defend $50k Despite FOMC Fears

FXEmpire.com -

Bitcoin (BTC) dropped to $50,600 within the daily timeframe on Feb 23, its lowest level in the last 10 days. The minutes of the Jan. 31 FOMC meeting released last Tuesday sparked fears among BTC traders. 

However, recent data trends indicate confidence returning to the BTC derivatives markets as the trading week draws to a close. Can the bulls pull off a surprise rally toward $55,000 before the end of February? 

Traders Overcome Fears Triggered by FOMC Meeting  

On Feb 21, BTC price wobbled below $50,700, its weekly low at the time. The price pullback had coincided with the scheduled release of the minutes of the last FOMC meeting that was held on Jan 31.

The report confirmed  Fed Chief Jerome Powell’s statements surrounding the regulators’ decision to “avoid cutting rates too soon”, hence, postponing the proposed interest downward review beyond the initially anticipated March 2024. 

As expected, Bitcoin markets reacted negatively to the event. Firstly, the Bitcoin ETF slowed down their buying pressure, buying less than half of nearly 20,000 BTC acquired last week. But the most apparent negative turn of events occurred in the derivatives markets. 

Santiment’s Funding Rates metric, presents a daily aggregate of fees paid between holders of perpetual futures contracts for a specific crypto asset. 

The chart below, shows that BTC funding rate recorded a noticeable dip on Feb 21, falling to 0.008%, its lowest since Feb 8. 

Bitcoin (BTC) Funding Rate vs. Price | Source: Santiment

Typically, a dip in Funding Rates suggests that traders are less confident in the prospect of short-term price upswing, and as a result offer lower fees to keep their contracts open. Unsurprisingly, BTC price wobbled below $50,700 twice in the subsequent 48 hours, that followed the blip in funding rate.  

However, after a skittish 48 hours, the funding rate trends shows that Bitcoin traders have regained confidence, and are showing conviction to defend the critical $50,000 support level. 

As seen above, BTC Funding rate has now bounced back, hitting $0.01 at the close of Feb 23. This is a vital signal that LONG position holders are not looking to throw in the towel, even as the ETF closing trading for the weekend is expected to cause a slight dip in institutional demand.

Bitcoin Price Forecast: Confident Traders to Defend $50,000 Support with this Move

The bulls show of confidence, denoted by the rising funding rates between Feb 21 and Feb 24, suggests that Bitcoin price will hold firm above the $50,000 support level over the weekend. 

IntoTheBlock’s global in/out of money data which categorizes existing bitcoin holders by their entry prices also affirms this stance. It shows that, with Bitcoin trading at $51,300 at press time, over 91% of current holders are in profit. Hence, majority of them may be unwilling to sell. 

In this instance, the 2.4 million addresses that acquired 1.04 million BTC at the maximum price of the $50,300 could mount significant support if the majority of them choose to HODL as observed earlier this week. 

However, if that key support level crumbles, the bulls may have to settle for a reversal toward $48,000 to find a more imposing buy-wall. 

Bitcoin (BTC) price forecast, February 2024 | Source: IntoTheBlock

On the upside, if the LONG traders back up their leveraged positions with covering spot purchases, BTC price could register an unexpected spike toward $55,000. However, this currently appears far-fetched considering the looming sell-wall at previous 2024 peak $53,000. 

In summary, strategic Bitcoin swing traders could hang their take-profit orders around $52,700, while short-term stop-losses could be placed at $50,300 price level.

This article was originally posted on FX Empire

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