As the US Federal Reserve prepares to raise interest rates this week, Bitcoin traders are beginning to get optimistic about the top-ranked cryptocurrency’s price. According to the latest reading from the Consumer Price Index (CPI), prices rose just 0.1% from the previous month and 7.1% from a year ago. This report has shifted market sentiment as investors anticipate a rate hikes of 50 BPS or even 25 BPS. The market reacted positively to these figures, with the Dow Jones soaring more than 800 points and the S&P 500 climbing as much as 4%, while Bitcoin surged higher to hit the resistance at $17,800.
Analysts agree that a 50 BPS hike should let BTC break $18,000 and head above $19,000. On the other hand, a lower interest rate hike of 25 BPS could potentially send the market soaring back above $20,000. The bullish sentiment being injected into the cryptocurrency sector is particularly interesting as the sector has been volatile and unpredictable for the past few weeks.
Indeed, BTC has dropped to a low of $14,000 and reached a high of $19,000 in the past month. As the currency breaks past the major $18,000 level, investors are eagerly waiting to see if the currency will continue to rise or if it will hit a plateau and fall back down. Traders that are considering entering the market should be aware of the risks associated with the volatile nature of the market.
Although analysts are expecting BTC to hit $19,000 or even $20,000 this week, price predictions are often inaccurate due to the volatility. As such, many investors are viewing this week’s pricing with a cautious optimism and are prepared to exit the market should the currency decline unexpectedly. In addition, investors should also be aware of the potential for government regulations and volatility within the cryptocurrency sector. Governments across the world are attempting to get a handle on the digital currency, and traders are wary of regulations that may be implemented in the future.
With the SEC set to review applications for the launch of new ETFs and the increasing popularity of Bitcoin, it is important for traders to remain aware of all of the developments taking place in the market. Given all of the factors at play, traders should exercise a degree of caution when entering the market and investing in Bitcoin. Although traders are eager to capitalize on the bullish sentiment and the potential for BTC to reach new highs, it is important to remain aware of the market’s volatility and the potential for regulations or other news to negatively impact the market.
As such, investors should cautiously examine the market and their potential investments carefully before entering and only invest an amount they are comfortable with losing. With a strong handle on the risks, traders may be able to accurately predict where Bitcoin prices are headed this week and beyond.