Bitcoin rallies 84% in 7 weeks after Fed signals and retail data

Bitcoin (CRYPTO:BTC) has shown a pattern of significant price rallies when three conditions align: easing expectations of Federal Reserve policy tightening, low leverage in the crypto market, and stronger-than-expected US retail sales data.

In early 2024, Bitcoin’s price surged 84% from $40,000 to $73,500 within seven weeks.

This rally followed a period of price stagnation near $43,000 in December 2023 and a dip to $37,800 in late January 2024.

At that time, the perpetual futures funding rate-a measure of leverage demand-was exceptionally low at 4% per year.

Additionally, US retail sales for December 2023, released on January 17, exceeded forecasts by rising 0.6% month-over-month versus the expected 0.4%.

Federal Reserve Chair Jerome Powell’s January 31 press conference signaled a tighter monetary stance with no immediate interest rate cuts, which also influenced market sentiment.

A similar pattern occurred in early 2023, when Bitcoin climbed 50% from $16,700 to $25,100 over seven weeks.

This followed two months of consolidation below $18,000 and minimal leveraged long positions.

The funding rate on Binance jumped to 50% within four days starting January 3, 2023, coinciding with retail sales data that rose 3% month-over-month in January 2023, surpassing the 1.9% consensus.

Powell’s remarks on January 10, 2023, about tighter monetary policy to combat inflation further shaped this environment.

An earlier example from July to September 2021 saw Bitcoin gain 76%.

This rally began after a price drop from $40,000 to below $30,000 and a funding rate increase from 0% to 37% in two weeks.

June 2021 retail sales surprised economists by increasing 0.6%, despite expectations of a 0.4% decline.

Powell’s August 27, 2021, Jackson Hole remarks hinted at reducing central bank asset purchases to curb inflation.

These episodes show that when Federal Reserve policy expectations ease, crypto market leverage is low, and US retail data is strong, Bitcoin tends to enter a bullish phase.

Upcoming Federal Reserve events, such as Powell’s June 18 speech and retail sales reports for May and June, will be closely watched for potential signals of the next rally.

At the time of reporting, the Bitcoin price was $94,220.71.