Sage Investment Club

Risk Markets Holding Up Ahead of FedDespite some nervousness in markets on the back of a gloomy outlook from Intel yesterday, tech assets appear to be holding up today ahead of the US open. Indeed, despite some intra-day volatility yesterday, the NASDAQ rebounded to end the day higher. Looking across the risk markets, crypt assets are also performing well this week with Bitcoin consolidating at highs following a solid rally over 2023 so far. With price holding above the 22600 level, the clear focus now is the FOMC next week.Bitcoin Outlook ImprovingThe Fed’s tightening program across 2022 sent Bitcoin plummeting from record highs. However, with the outlook for the Fed and US rates having shifted materially in recent months, the market is now finding fresh demand and traders are questioning whether BTC is at the start of a fresh bull phase.FOMC In FocusLooking ahead to next week’s FOMC meeting, the battle lines are clearly drawn. If the Fed sticks to a further .5% hike and signals the need to keep pressing ahead with tightening into 2024, striking a more cautious tone over inflation, USD is likely to rebound sharply, sending BTC lower once again. However, if the Fed pivots again towards a smaller .25% (now base case scenario), this will pave the way for a lower USD and higher prices for BTC. The main focus will then be on the Fed’s outlook. If the Fed is seen sounding more optimistic about inflation and opens the door to potentially bringing forward the end of its tightening program (as we just saw from the BOC), this should send USD sharply lower, driving BTC higher near-term.Technical ViewsBTCThe rally in BTC this year has seen the market blowing through several key technical levels. More recently, price has broken above the 22600 level and is currently sitting atop the level as support. While above here, and with momentum studies bullish, the focus is on a continuation higher towards 24930 next. This will be a major test for the market with a break there likely to encourage plenty of fresh buying interest.

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