Bitcoin (BTC) consolidated below $40,000 on May 5 after United States economic policy excitement saw a spike to one-week highs.
Fed sparks little crypto reaction
The U.S. central bank had conformed to market expectations with a 0.5% key rate hike, also suggesting that similar repeat hikes would follow.
With that, a modest market rally left Bitcoin eerily lacking volatility in what was a strong contrast to previous Fed pronouncements on topics such as inflation.
While many expected risk assets en masse — including crypto — to deflate under the new policy, not everyone believed that such a scenario would cause investors maximum discomfort.
“With so many people calling for melt ups and melt downs, maybe the pain trade is to chop sideways in risk assets for a long time,” economist Lyn Alden argued.
Bitcoin circles likewise were not expecting major trend changes. Ben Lilly, a token economist at Jarvis Labs, highlighted low funding rates on BTC derivatives markets.
“Market saw some relief with Powell’s comments. But will it continue for the crypto market? To start, funding rates have been negative for a long period of time. This tends to happen at range lows,” he wrote in a series of tweets:
Lilly added, however, that a lack of accumulation from whales at current price levels was “not what we hoped to see.“
“Max pain” for Bitcoin still far away
Focusing on lower timeframes, popular trader Crypto Ed held out for a fresh push above the $40,000 mark on May 5.
For him, BTC/USD was in line to hit $40,800, and while there were “plenty of reasons” to discount a more significant climb, it was still an option.
In terms of BTC price capitulation scenarios, meanwhile, on-chain monitoring resource Whalemap repeated its previous assertion that the area between $25,000 and $27,000 would constitute “max pain” for Bitcoin hodlers.
“A lot of liquidity and stop losses are stacked there,” it explained as part of Twitter comments.
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