Bitcoin has been performing really, really well recently, but the question is how will it react to all of crucial central banks' decisions this week. Bank of England is expected to choose 50bp variant, but it's not that sure as the Fed decision.
Michalis Efthymiou: Yes, the price of Bitcoin has gained momentum over the past 4 weeks, and this has largely been linked to specific influential factors.
The bullish trend has been fueled by the weakening monetary policy as well as a strong economic outlook. Most economists and institutions, such as the IMF, have advised that the risks of a recession are fading. Both factors have resulted in a higher risk appetite and investor confidence throughout the market. This tends to be positive for assets such as cryptocurrencies and stocks. Investors were also keen to invest in the discounted price which was triggered by the FTX crisis.
Bitcoin continues to show recovery signs with the total market capitalization increasing above $445 Million. Additionally, Bitcoin has also managed to hold a market share of more than 40%. However, investors should be cautious that the total cryptocurrency market volume this week has declined by 12%.
This could be related to investors holding off until further clarification is obtained from the Fed, ECB, and BoE. So could change after Thursday. In regard to how high the price can go, unfortunately this cannot be known for sure. However, it is clear the price is in a better position this month but has slowed potentially due to the monetary policy decisions ahead.
Michalis Efthymiou: Yes, the Bank of England’s base rate is 1% lower than the Fed’s Fund Rate. However, it should be noted that the pricing is not solely dependent on this element. The difference has already been priced into the exchange rate and is likely to have a minimal effect.
Investors will now largely be concentrating on how much the 2 institutions will choose to hike this month. At the moment, the Federal Reserve is expected to hike 25 basis points, but the Bank of England’s decision is less certain. The Bank of England previously had 2 out of their 9 members vote to keep interest rates unchanged. In addition to this, investors are eager to gain further insights regarding the bank’s intentions for 2023. For example, whether they can foresee a cut in interest rates towards the end of the year.
