"When the ants get scared, that's when it truly begins"...Will Bitcoin revive with Kevin Warsh as a Fed variable?

▲ Bitcoin (BTC)

Although Bitcoin (BTC) faced short-term correction pressure after being halted at the $83,000 resistance level, Crypto Capital Venture diagnosed that a Fed policy shift and changes in the macro environment could support the resumption of the cryptocurrency market's upward trend.

Dan Gambardello, host of the cryptocurrency-focused YouTube channel Crypto Capital Venture, presented the possibility of Kevin Warsh being confirmed as the Federal Reserve (Fed) chairman as a key bullish variable for the cryptocurrency market in a video released on May 14 (local time). Gambardello emphasized that Warsh's preference for an approach that deviates from the Fed's traditional inflation assessment and monetary policy methods is more important than simply being pro-crypto.

Gambardello explained that Warsh might prioritize trimmed mean inflation indicators over the core Personal Consumption Expenditures (PCE) index. He believes that a method of identifying underlying inflation trends by removing extreme price fluctuations, based on the perception that existing inflation indicators are incomplete, could change the Fed's interest rate decisions. In particular, he argued that if a plan to simultaneously pursue interest rate cuts and balance sheet reduction materializes, it could create an environment different from the existing policy framework centered on quantitative easing and quantitative tightening, which would be favorable for cryptocurrencies, considered risk assets.

Regarding the inflation variable, Gambardello pointed out that recent Producer Price Index (PPI) figures and inflation concerns largely reflect the impact of the Middle East situation and rising energy prices. He explained that if Middle East risks ease and oil and gasoline prices fall, inflation data could reverse, and the Fed's room to pursue accommodative policies would expand. In this process, he suggested that if economic expansion and a productivity boom coincide, the oversold phase of the cryptocurrency market could lead to a bullish reversal.

However, Bitcoin's short-term price trend has not yet entered a confirmed uptrend. Gambardello suggested key support levels as $79,000, where the 20-day moving average is located, $74,000 to $75,000 for the 50-day moving average, and the $68,000 to $71,000 range, which is the Fibonacci 61.8% to 78.6% retracement level.

Gambardello drew a line at simply comparing Bitcoin's current 200-day moving average resistance to the 2022 bear market. He explained that 2022 was when quantitative tightening was just beginning, but currently, it is a phase where Fed policy changes, U.S. cryptocurrency market structure legislation, and a recovery trend after being oversold are all at play. The core conclusion of the video is that if Bitcoin can create higher highs and higher lows above the 20-week moving average, the market structure could continue a bullish reversal trend different from 2022, despite short-term resistance failures.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*