BTC Relief Bounce Linked to Fed’s Dovish Tilt on QT

• Some technical price indicators were yet to flip bullish for sustained BTC price recovery at the time of writing.

On March 19, Bitcoin (BTC) reclaimed $85K, with analysts linking it to the Fed’s slow pace of quantitative tightening (QT).

According to the crypto options trading desk QCP Capital, the dovish tilt in QT was viewed as an ‘indirect interest rate cut.’

In its daily market review, QCP Capital stated:

> “Last night’s FOMC meeting delivered the catalyst markets had been waiting for, pushing $BTC past $85K in a sharp rally. The driver? The Fed scaling back QT starting in April. Markets see this as an indirect rate cut.”

Jamie Coutts, chief crypto analyst at Real Vision, noted the QT taper would improve US dollar liquidity, stating:

> “Treasury volatility has backed right off and is now mirroring the decline in DXY from earlier this month. This is all extremely liquidity-positive.”

What’s Next for Bitcoin?

The QT dovish tilt wasn’t surprising; some analysts had projected such an outcome. Now, the focus shifted to BTC’s next move and whether the relief bounce would be sustainable to reverse recent losses.

Arthur Hayes, founder of BitMEX and CIO at Maelstrom crypto fund, indicated that BTC might have bottomed out at $77K after the Fed’s move but cautioned of potential downside risk for stocks:

> “The next thing we need to get bulled up for real is either SLR exemption and or a restart of QE. Was $BTC $77K the bottom? Probably. But stocks probably have more pain left to fully convert Powell to team Trump, so stay nimble and cashed up.”

From a price analysis perspective, BTC reclaimed key moving averages on lower timeframes, reinforcing a bullish shift. However, pseudonymous crypto trader Income Sharks warned that more conviction would arise only when OBV (On Balance Volume) clears its overhead resistance:

> “Now, to see what $BTC does at OBV resistance and diagonal resistance. Would be a clear sign of strength to see a follow-through here.”

BTC’s recovery would be capped if OBV weakened after encountering resistance level, implying weak volume. Conversely, BTC’s recovery would receive a boost if volume picked up.

QCP Capital added that options market sentiment also turned positive but sustained bullish movement depended on upcoming trading days:

> “Options markets reflect the shift in sentiment. Call skew is back, reversing from earlier bearish positioning. The key test now is tonight’s US open. Will the rally sustain, or will markets reassess the risks?”