Bitcoin is consolidating below the psychological level of $25,000 per coin while remaining below the upper boundary of the local ascending channel.
From a technical analysis standpoint, there are two possible scenarios: BTC may either continue its correction and drop to $22,000, or break above $28,000, which would then open the way towards $28,000 for BTC/USD.
Let us examine the fundamental factors that could drive the cryptocurrency towards either of these scenarios.
Key fundamental factors of this week
A batch of important macroeconomic data will be released this week which could affect the crypto market. Investors should pay close attention to these data releases.
Over the past few weeks, Bitcoin has managed to break its correlation with the S&P 500 and the US dollar index (DXY). However, the Federal Reserve's monetary policy is likely to influence the cryptocurrency significantly.
There are few events on the economic calendar on Monday as the US celebrates Presidents' Day. However, there are two key events that will have a great impact on the market this week, in addition to a number of quarterly corporate earning reports being released throughout the week.
What to expect from FOMC meeting minutes
The FOMC meeting minutes will be released on Wednesday, February 22. The minutes will clarify the rhetoric of Fed policymakers at the February 1 meeting of the FOMC and explain in detail the financial and economic factors that influenced the regulator's decision on interest rates.
Bitcoin investors this week will pay particular attention to this document. According to remarks by several Fed policymakers last week, the interest rate decision at the previous FOMC meeting was not unanimous. Furthermore, the US inflation data which was published last week was unexpectedly hot.
There is speculation that the Fed could use the meeting minutes to subtly adjust their rhetoric. The report might hint at an imminent sharp rate hike, which could send the stock market tumbling down.
Furthermore, Jerome Powell noted earlier that the meeting minutes will clarify when the Fed will stop its rate hike cycle. This is also critical for stock markets.
Moreover, the Fed is likely to report that it wants to get several months of inflation data, signaling that the Fed is on track to meet its 2% target. The extremely tight labor market will remain the focus here, as wage pressures are incompatible with a 2% inflation target.
Amid all this, Bitcoin investors should keep a close eye on the FOMC minutes to see if the Fed strengthens its hawkish stance. If it does, it could jeopardize the continued growth of the leading cryptocurrency.
Personal consumer expenditures: what to follow
The second key event of the week, the release of US PCE data, will occur on Friday, February 24.
The PCE index is a key inflation indicator for the Federal Reserve because it reflects consumer spending habits in a more timely fashion than the Consumer Price Index (CPI).
The core PCE index excludes volatile and seasonal food and energy prices compared to PCE. Since October 28, core PCE has fallen to 4.4% from 5.1% year-over-year.
This time, it is expected to rise by 0.4% in January, compared to 0.3% in December and 4.3% year-over-year. If PCE surpasses expectations, inflation fears will intensify, as will expectations of a hawkish Fed policy stance. This could also weigh down on Bitcoin's price.
Crypto bull run: East takes initiative
Now we should look at the long-term outlook for the cryptocurrency market. Cameron Winklevoss, the co-founder of Gemini, has recently voiced his opinion that the next cryptocurrency bull run will originate in East Asia.
His remarks came amid increasing enforcement actions and looming crackdowns by US regulators, including the Securities and Exchange Commission (SEC).
"It will be a humbling reminder that crypto is a global asset class and that the West, really the US, always only ever had two options: embrace it or be left behind. It can't be stopped," he said.
According to a report by Chainalysis, the Central, South Asia and Oceania region (CSAO) was the third-largest cryptocurrency market in its 2022 index. Residents of these areas received $932 billion in crypto from July 2021 to June 2022.
Seven of the top twenty countries in the 2022 index were also from that region, including Vietnam (1), the Philippines (2), India (4), Pakistan (6), Thailand (8), Nepal (16), and Indonesia (20).
Winklevoss added that governments that fail to provide clear rules and sincere guidance on cryptocurrency will be left behind, missing out on the biggest period of growth since the advent of the commercial Internet.
Industry leaders see crypto booming in Asia
Other industry leaders have suggested that the US approach to cryptocurrency might push the industry away or that the next cryptocurrency growth cycle could occur in Asia.
According to co-founder and CEO of Coinbase Brian Armstrong, tough actions by the US Securities and Exchange Commission and other US regulators could lead to more cryptocurrency companies moving offshore.
Last month, an independent market analyst under the Twitter handle GCR predicted that China and Asia as a whole would contribute to the next rally in the cryptocurrency market.
Arthur Hayes, the former CEO of BitMEX, predicted in October 2022 that the next bullish rally would begin when China would reenter the market, with Hong Kong playing an important role in that process.
According to Hayes, Hong Kong could be a testing ground for Beijing's crypto market experiments. It would also be a place where Chinese money could enter the global cryptocurrency market.
