Bitcoin surged to above $74,000 on Monday, wiping out nearly $300 million in short positions in the process.
Yet the strength carries caveats, analysts warn.
“With price returning above $72,000, short-term holders are back in profit on average,” Illia Otychenko, lead analyst at the CEX.IO exchange, told DL News. “This matters because short-term selling pressure was the main force limiting upside momentum.”
“If Bitcoin declines, short-term holders who just returned to profit could quickly move back into losses and start selling again. That would increase pressure on the market and could push volatility higher in the short term.”
The rally comes as markets brace for a pivotal macro week dominated by the Federal Reserve’s interest-rate decision and Chair Jerome Powell’s press conference on Wednesday. Ahead of the meeting, US President Donald Trump has ramped up his attacks against Powell and what the president views as the central bank’s sluggish rate-cutting pace.
Otychenko’s warning also comes against a backdrop where Bitcoin’s price has become intimately linked to the escalating conflict in the Middle East, with experts warning that surging oil prices will weigh heavily on Bitcoin’s performance.
March FOMC
All eyes turn to Washington this week.
The Federal Open Market Committee meets Wednesday, with the CME FedWatch tool pricing in near certainty that rates will remain at 3.5% to 3.75%.
The decision itself is unlikely to surprise, but Powell’s tone is what matters.
Investors will parse every word for signals about how policymakers view the Middle East conflict’s inflationary impact. Oil surged above $105 a barrel on Sunday, adding fresh complexity to the Fed’s balancing act between cooling inflation and supporting a labour market showing signs of strain.
On Thursday, 15,000 contracts that Brent crude would trade around $145 traded, suggesting that investors are betting that the price is going to rise even more.
The Producer Price Index, due Wednesday, will offer another inflation snapshot. Reports on home sales and jobless claims later in the week will further test the narrative of economic resilience.
Adding to the tension, this week, policymakers from the Federal Reserve, European Central Bank, Bank of Japan, Bank of England, Bank of Canada, Swiss National Bank, Sweden’s Riksbank and the Reserve Bank of Australia will all deliver fresh rate decisions.
Though surprises are always possible, none is expected to adjust official rates. The preference is to wait and assess how the war in Iran evolves, according to Ed Yardeni, president of Yardeni Research.
Trump renews attacks
Against that backdrop, US political warfare is intensifying.
On Monday, Trump launched a fresh broadside at Powell on social media, accusing him of “horrible performance” and criticising cost overruns in the renovation of the Federal Reserve’s Washington complex.
Trump has repeatedly mocked Powell as being “too late” to cut rates, which worsened tensions between the White House and the US central bank.
The US stock market begins the week on uneven footing. Investors will scrutinise earnings from Micron Technology for clues about the durability of the artificial intelligence boom, while FedEx and Dollar Tree results may reveal how stretched US consumers have become.
If corporate guidance signals slowdown, risk appetite could thin quickly.
What about Bitcoin?
Bitcoin’s recent behaviour suggests a shift in its behaviour.
Despite being down 42% from its October peak, the top crypto has held up better than some traditional benchmarks during the Iran conflict, decoupling modestly from stock market drawdowns.
“Bitcoin’s performance looks solid, adding nearly 12% since the beginning of the Iran war, while major US indices and gold remain underwater,” Otychenko said.
A hawkish surprise from Powell could ignite renewed downside pressure. Conversely, any hint that policymakers are comfortable with the inflation trajectory would pour fuel on the squeeze.
