Bitcoin Bottom Signal and FED Interest Rate Expectations Simultaneously Dominating the Talk! Which Will Determine the Direction? Two Expert Analysts Evaluate!

While Bitcoin has been fluctuating between $76,000 and $79,000 in recent days, on-chain analyst Willy Woo analyzed $BTC’s monthly chart using the Fisher Transform indicator.

Woo noted that the Fisher Transform indicator on Bitcoin’s monthly chart has formed a golden cross. According to Woo, this development stands out as the fourth bottom signal seen in Bitcoin’s history.

Not a Signal of a Sudden Rise!

Woo stated that the Fisher Transform indicator, published in 2002, identifies turning points in Bitcoin price movements, and that the current golden cross in this indicator is the 4th bottom signal in history, while the previous 3 did not lead to false breakouts.

However, Woo noted that this indicator alone is not a sudden trend reversal or a direct buy signal. He stated that the Bitcoin price may move sideways for a while before continuing its current upward trend.

Woo also noted that in the past, the Fisher Transform indicator has been seen to cross bearish and then bullish again during bull markets, but this did not necessarily mean the main trend had ended. Therefore, while the current signal points to a possible bottom, it does not, by itself, definitively mean a trend reversal.

Interest Rate Hikes Alone Are Not a Bearish Signal for Bitcoin!

Crypto analyst Murphy stated that the interest rate hikes by the US and Japanese central banks alone do not indicate that Bitcoin will re-enter a bear market. According to Murphy, the pace of monetary tightening, market structure, and investor positioning will be more decisive than the interest rate hike decisions in determining the direction of $BTC.

A Comparison of 2022 and 2023!

The analyst noted that in 2022, the Fed implemented a total of 425 basis points of interest rate increases, including four consecutive 75 basis point hikes from June to November. Despite this, the analyst pointed out that Bitcoin fell from approximately $41,000 to $15,800.

In contrast, despite the Fed raising interest rates four times by 25 basis points in 2023, Bitcoin rose from approximately $16,500 to $42,000.

The analyst also noted that when the FED increased interest rates five times between December 2015 and December 2017, each time by 25 basis points, Bitcoin surged from approximately $454 to $16,515.

At this point, the analyst, while comparing these periods, pointed out that interest rate hike decisions alone do not necessarily mean a decline in Bitcoin.

Finally, the analyst added that the current structure of the Bitcoin market resembles the conditions at the beginning of 2023 more than those during the first interest rate hike period in 2022. The analyst noted that during that period, inflation fell, the size of each interest rate hike decreased from 75 to 25 basis points, and the market priced in the end of interest rate hikes.

According to the analyst, if interest rate hikes remain limited to around 25 basis points and the market does not expect a new, prolonged tightening cycle, interest rate policy alone may not be enough to trigger a new bear market in Bitcoin. At this point, the pace and scale of future Fed interest rate hikes will be critical for Bitcoin’s trajectory.

*This is not investment advice.