Bitcoin rebounds above $43,000 as analysts highlight possible rate pause at Fed’s January meeting

Bitcoin BTC +0.93% ‘s price rebounded on Tuesday, with analysts suggesting the digital asset could be supported by the possibility of a rate pause in the U.S. at the Federal Reserve’s next meeting at the end of January.

The price of the world’s largest cryptocurrency by market capitalization increased by over 1.4% over the past 24 hours, rising to $43,071 at 11:34 a.m. ET, according to The Block’s Price Page.

The price of bitcoin has gained by over 1.4% in the past 24 hours. Image: The Block.

Possibility of Fed rate pause

In 15 days time, the Federal Reserve will hold a meeting to decide the central bank’s monetary policy direction. According to the CME FedWatch tool, there is a 97.4% chance that the Fed funds rate will remain at its current target range of 5.25%–5.50%.

Bitfinex analysts said a January rate pause would «provided relief for a strained banking sector and tepid stock market, with a potential boost for bitcoin.»

The analysts also pointed to the central bank’s Summary of Economic Projections, where the central bank anticipated the lowering of its policy rate by approximately 75 basis points throughout 2024.

«This potential reduction is seen as a move to bolster the economy, particularly if inflation continues to align with the Fed’s stability goal. However, the timing and scale of these rate cuts are critical. Premature or excessive reductions could reignite inflation, while delays or minimal cuts could hinder economic growth,» the Bitfinex analysts told The Block.

However, onchain metrics point to increased sell pressure on the digital asset due to a steady rise in bitcoin exchange reserves since the end of December. According to data from CryptoQuant, the liquid supply of bitcoin on centralized exchanges has increased from around 2,060,000 to around 2,101,400, an increase of over 2% in the past month.

Bitcoin exchange reserves have increased steadily since the end of December. Image: CryptoQuant.

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