The bullish momentum that propelled Bitcoin (BTC) price to a 2023 high at $23,048 appears to have waned on Jan. 25 as the price dropped to a intraday low at $22,300. The pause in bullish momentum appears connected to lowered earnings expectations from big tech companies and the Federal Reserve’s Federal Open Market Committee (FOMC).
The contraction in Bitcoin price follows a market-wide decline, and analysts fear that the crypto market could face considerable danger from the FOMC decision.
Let’s take a closer look at the factors impacting Bitcoin price today.
Stocks correct on the expecation of poor earnings
Stocks and Bitcoin price tumbled after recently released corporate earnings reports showed top companies like Microsoft (MSFT) revising down revenue projections as interest rates rise. As reported by Cointelegraph, Bitcoin price remains closely correlated to equities and stock market investors have previously expressed strong concerns about a potential upcoming recession in the U.S. economy.
Bitcoin correlation. Source: Coin Metrics
While some analysts believe Bitcoin’s current price represents a generational buying opportunity at current levels, others believe BTC’s close correlation to the U.S. dollar index (DXY) and equities is reflected by the price weakness at the $22,500 level.
Bitcoin price is reacting to the market’s consensus expectation of poor earnings impacting big technology companies like Microsoft, Alphabet, Salesforce and Tesla. On Jan. 25, Microsoft slid as much as 4% with the others losing as much as 3%.
In addition to steady layoffs in big tech, inflation seems to be drastically hindering company earnings, which may affect the Fed’s FOMC decision. According to John Butters, a senior earnings analyst with FactSet:
“Higher costs are likely having a negative impact on net profit margins. Producer prices increased by 6.2% in December. Again, although the number has been falling over the past several months, the percentage has exceeded 6.0% (year-over-year) for 21 straight months. During the previous earnings season, 402 S&P 500 companies cited “inflation” on earnings calls for…..