Is Bitcoin Stuck? Here’s Why Rising Rates Threaten Crypto’s Next Move

Bitcoin is currently experiencing a period of sideways movement. When we closely analyze the daily chart of Bitcoin/USD, we observe that BTC’s price oscillates between $71,700 and $58,000. This sideways movement began after Bitcoin reached its peak in mid-March.

But what is causing this stagnation? One of the primary reasons is the tighter monetary policy of the United States.

The Impact of US Monetary Policy on Bitcoin

Understanding the impact of US monetary policy on Bitcoin is crucial for any crypto trader. Without this understanding, predicting future price movements of BTC becomes challenging. Since March 2022, the US has been tightening its monetary policy, resulting in a consistent increase in interest rates. 

A social media user, identified as MAC.D, noted in a post on X that as US interest rates rose, the circulation of stablecoins decreased. This decrease has led to a liquidity crisis, as stablecoin liquidity was a key factor that helped maintain Bitcoin’s price strength last year.

At this point, it is essential to recognize that a strong upward rally in Bitcoin is unlikely until there is a positive shift in the liquidity and circulation indexes of the stablecoin market. For this shift to occur, a more supportive US monetary policy is urgently needed.

Expert Advice for Bitcoin Investors

Experts advise investors to adopt a long-term view of the Bitcoin market. To predict the next significant move in Bitcoin, closely monitoring developments in US monetary policy and stablecoin circulation is crucial.

In summary, understanding the interplay between US monetary policy and the stablecoin market is key to forecasting Bitcoin’s future price movements.

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Is it time to adjust your Bitcoin strategy?