Bitcoin’s price experienced a recovery on May 2nd following the decision by the United States Federal Reserve to maintain interest rates and dampen expectations of rate cuts in 2024. In the released minutes of the Federal Open Market Committee (FOMC) on May 1st, the Fed declared that interest rates would remain at 5.25%–5.50% and emphasized the need for “greater confidence that inflation is moving sustainably toward 2%” before considering rate cuts. Additionally, the Fed revealed plans to reduce the pace of its balance sheet reductions, known as quantitative tightening (QT), from $60 billion to $25 billion per month. Market analyst Fejau expressed that the FOMC press release conveyed mixed signals, appearing dovish on the balance sheet but hawkish on rate cuts.
Despite this, the FOMC decision appears to have boosted risk appetite and asset prices. Bitcoin’s price began to rebound shortly after the news, rising over 3% in the last 24 hours and trading at $59,077 at the time of writing. On May 2nd, Bitcoin reached a high of $59,482, leaving market participants speculating if the downward trend has concluded.
The recent price decline marked Bitcoin’s lowest level in two months, with a 6.7% drop from its price at the halving. In light of BTC’s price action, trader and analyst Rekt Capital commented that the cryptocurrency is following a similar pattern to the 2016 Bitcoin halving. After the halving event in 2026, the “Re-accumulation Range” experienced “additional corrections” of up to 17%, lasting up to three weeks. Rekt Capital noted that the current deviation is -6%, suggesting that there is a possibility for further downward movement as standard cycle phenomena continue to unfold.
Examining on-chain metrics provides valuable insights into Bitcoin’s recovery following the drop to $57,000. One important metric to consider is the Short-Term Holder Market Value to Realized Value (STH-MVRV) ratio, which currently stands at -6% according to data from Santiment. This ratio compares the current market value of Bitcoin to the average price at which coins were last moved. Santiment suggests that markets tend to bounce back more effectively when the MVRV ratio is in the negative range.
Another metric pointing to a potential market rebound in the short term is the ratio of BTC transactions moving at a loss compared to those moving at a profit. Santiment’s chart reveals that there is a higher ratio of Bitcoin being moved at a loss compared to transactions moving at a profit.
It is important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.