Main Points:
- Fed Policy Shift: The FRB’s decision to pause interest rate hikes and hint at future easing is reducing inflationary pressures, boosting market sentiment.
- Tariff Flexibility: Trump’s recent softening of tariff measures has eased trade tensions, providing additional confidence in the economic outlook.
- Technical Signals: Bitcoin’s technical indicators, including oversold RSI levels and recovery of the 21-day moving average, suggest that the recent price decline may be a temporary correction within a bullish market cycle.
- Long-Term Outlook: While Bitcoin experienced a 30% drop over the past two months, analysts like Arthur Hayes and PlanB foresee a typical bullish market correction—potentially bottoming near $70,000—and project dramatic long-term growth.
Introduction
According to Marx Schiren, founder of 10x Research, Bitcoin appears to be reaching a turning point driven by two key factors: the Federal Reserve’s shift toward easing monetary policy and President Trump’s more flexible stance on tariffs. On March 23, these developments led to renewed market confidence that Bitcoin is beginning to form its bottom. With the FRB pausing interest rate hikes amid signs of easing inflation and reducing its quantitative tightening measures, investors are expecting future liquidity injections that could spur further asset purchases. Concurrently, Trump’s recent decision to soften tariff policies, particularly regarding trade with Canada, Mexico, and China, has reduced economic uncertainty and bolstered risk asset sentiment.
Fed Easing: A Major Catalyst
Interest Rate Hold and Future Easing
During the March 19 FOMC meeting, the Federal Reserve opted to hold policy rates steady. Chair Jerome Powell acknowledged that while inflation remains high, its pace is gradually slowing down. This dovish tone, along with plans to scale back quantitative tightening, is widely interpreted as a signal that the Fed might transition toward future easing. Marx Schiren emphasizes that such a policy shift could inject much-needed liquidity into the market, which would benefit risk assets like Bitcoin.
Impact on Bitcoin
Historically, when the Fed signals a potential shift from tightening to easing, liquidity conditions improve, and asset prices tend to rally. Former BitMEX CEO Arthur Hayes notes that a typical bullish correction often follows after a significant drawdown. In his view, Bitcoin’s recent 30% decline is a normal part of a bull market cycle—suggesting that the current dip could be just a temporary adjustment before prices rebound.
Tariff Softening and Market Confidence
Trump’s Flexible Tariff Approach
Earlier in the year, President Trump had adopted a hard line on tariffs, announcing steep duties on imports from Canada, Mexico, and China. However, recent actions—including the postponement of certain tariff measures and the decision to delay auto parts tariffs—have provided relief to the markets. This move has alleviated concerns about the potential adverse impact on corporate earnings and economic growth.
Boost to Risk Assets
The easing of trade tensions has led to an immediate positive reaction in both equity and crypto markets. Bitcoin, for instance, briefly surged into the $90,000 range following the tariff-related news. Marx Schiren of 10x Research points out that Trump’s tariff flexibility is now serving as a supportive factor in Bitcoin’s potential bottom formation, as reduced trade friction typically encourages further capital inflows into risk assets.
Technical Signals and Market Correction
Oversold Conditions and Moving Averages
From a technical perspective, Bitcoin has shown signs of oversold conditions over the past two months, with several indicators reaching levels that historically precede a rebound. The 21-day moving average, currently around $85,200, is now beginning to turn in favor of buyers. Additionally, weekly reversal indicators are at levels similar to previous bullish recoveries. Notably, the Relative Strength Index (RSI) had dipped into the low 30s during mid-March, a level that in past cycles has been followed by a significant rebound.
Short-Term Adjustments vs. Long-Term Trends
Although Bitcoin experienced a roughly 30% decline—once dropping to around $76,000—analysts like Arthur Hayes believe that such corrections are typical in a bull market. Hayes projects that Bitcoin might bottom out near $70,000 before rallying again. Meanwhile, PlanB maintains a long-term bullish outlook, predicting that Bitcoin could reach $160,000 by the end of 2025, potentially doubling in subsequent years.
In summary, the convergence of the Federal Reserve’s hints at future monetary easing and President Trump’s tariff softening is fostering a more positive economic outlook that is likely to benefit Bitcoin. Technical indicators suggest that the recent price drop—despite a 30% decline—is merely a healthy correction in a bullish market cycle. While immediate resistance around $90,000 remains, long-term forecasts by prominent analysts indicate that Bitcoin is well-positioned to rebound, with some predicting dramatic multi-year growth.
Investors should remain cautious of short-term volatility but also consider that these macroeconomic and policy shifts may trigger a sustained upward trend. As market sentiment continues to improve, Bitcoin could soon find itself at the beginning of a robust recovery phase, setting the stage for new all-time highs.
