Bitcoin (BTC) price recovered on May 2 after the United States Federal Reserve decided to leave interest rates unchanged and dampened investors’ hope for rate cuts in 2024.
The Fed also revealed plans to slow the pace of its balance sheet reductions – the so-called quantitative tightening (QT) – from $60 billion per month to just $25 billion per month.
BTC price started bouncing back minutes after the news, rising more than 3% over the last 24 hours to trade at $59,077 at the time of publication.
Bitcoin’s price rose as high as $59,482 on May 2, leaving market participants wondering whether the downtrend is over.
Bitcoin price is repeating the 2016 cycle The recent price drop saw Bitcoin hit its lowest level in two months, a 6.7% drop from its price at the halving.
In a recent comment on BTC’s price action, popular trader and analyst Rekt Capital said that the cryptocurrency followed a similar trend after the 2016 Bitcoin halving.
“This deviation is -6% thus far,” Rekt Capital added, implying that the BTC price could dip further as standard cycle phenomena still play out.
This ratio essentially compares the current price at which Bitcoin is trading (the market value) to the average price at which coins were last moved (the realized value).
The price of Bitcoin (BTC) increased on May 2 following the US Federal Reserve’s decision to maintain current interest rates, which dashed investors’ hopes of a rate reduction in 2024.
The Federal Reserve stated in the minutes of the FOMC meeting on May 1 that interest rates would remain between 5 and 25 percent. The Fed also stated that before reducing rates, it would require “greater confidence that inflation is moving sustainably toward 2 percent.”.
The Fed also disclosed intentions to reduce the amount of money it is reducing from $60 billion to just $25 billion per month as part of its balance sheet reduction program, known as quantitative tightening (QT).
“The Committee will lower the monthly redemption cap on Treasury securities from $60 billion to $25 billion starting in June, which will slow the rate of decline of its securities holdings. “.
The FOMC press release, according to market analyst and X user Fejau, sent conflicting signals: it was cautious about the balance sheet while being aggressive about rate cuts.
However, it appears that asset prices and risk appetite have increased as a result of the FOMC decision. The price of Bitcoin began to rebound shortly after the announcement, increasing by more than 3% in the preceding day to trade at $59,077 at the time of writing.
On May 2, the price of bitcoin reached a high of $59,482, raising questions among market players about whether the downward trend has ended.
The price of bitcoin is rerunning its 2016 cycle.
With the recent price decline, Bitcoin dropped to its lowest point in two months, a 6:7% decrease from its halving price.
Popular trader and analyst Rekt Capital recently commented on the price action of BTC, stating that the cryptocurrency followed a similar trend following the 2016 Bitcoin halving.
By recently veering below the current Re-Accumulation Range Low, Bitcoin has once again replicated the events of 2016. “.
The “Re-accumulation Range” experienced “additional corrections” of up to 17 percent for as long as three weeks following the 2026 halving event.
“This deviation is -6 percent so far,” Rekt Capital continued, suggesting that there may be more declines in the price of Bitcoin while regular cycle phenomena continue to occur.
How far down? he observed.
The response won’t go much deeper or take much longer before Bitcoin eventually hits rock bottom. “.
“Crowd capitulation” supports the rise in bitcoin prices.
Important information about the rebound of Bitcoin after its decline to $57,000 can be obtained by closely examining on-chain metrics.
Consideration should also be given to the Short-Term Holder Market Value to Realized Value (STH MVRV) ratio, which is currently at -6 percent based on data from Santiment.
The market value, or current price at which Bitcoin is trading, is compared to the realized value, or average price at which coins were last moved, in this ratio.
The market research firm claims that when the MVRV ratio is in the negative range, markets bounce most successfully.
In addition, the ratio of transactions moving at a loss to those moving at a profit suggests that there may be a short-term market rebound.
According to Santiment’s chart below, a larger percentage of BTC transactions are moving at a loss than those that are moving at a profit.
This is a major indicator of crowd capitulation, so it frequently correlates well with bottoms. “.
There are no recommendations or advice regarding investments in this article. Readers should do their own research before making any decisions because there is risk involved in all trading and investment decisions.
