The crypto market fell under pressure to start the week as hawkish comments from Fed chair Powell regarding interest rates took a toll on all financial markets and had traders scrambling for cover on Monday. 

Stocks trended lower at the open and spent the rest of the day attempting to make up for lost ground, but came up short at the market close. When all was said and done, the S&P, Dow, and Nasdaq all recorded losses on the day, closing down 0.32%, 0.71%, and 0.20%, respectively. 

Data provided by TradingView shows that Bitcoin (BTC) bounced off support at $42,240 in the early hours on Monday and proceeded to rally 3% to hit an intraday high at $43,508. But bears redoubled their efforts in the afternoon and managed to drop BTC back to support near $42,350, where it trades at the time of writing. 

BTC/USD Chart by TradingView

According to Markus Thielen, head of research at Matrixport, “February tends to be a favorable month for Bitcoin, showing a notable seasonal pattern with positive returns in 7 out of the last 10 years and averaging at +8%.”

Bitcoin seasonal performance. Source: Matrixport

“Despite still yielding positive returns, performance during specific months tends to be modest,” Thielen said. “A noticeable seasonal pattern emerges in Bitcoin returns, with the fourth quarter boasting the highest returns, closely trailed by the second quarter.” 

“Despite still yielding positive returns, the first and third quarters exhibit a mixed performance on average,” he added. “Notably, while Bitcoin’s January performance tends to be modest at +1%, February stands out as a more favorable month for long positions, with prices trending higher in 7 out of the last 10 years, averaging +8%.”

Long term, Thielen said he expects Bitcoin to rally about 65% from current levels to hit $70,000 by the end of the year.

“Supported by the macro environment, monetary tailwinds, the U.S. election cycle, and gradually increasing demand from TradFi investors allocating to bitcoin ETFs, a Bitcoin rally to $70,000 appears plausible,” Thielen wrote in a report released on Friday. “While the Fed has pushed out the first rate cut to (possibly in) May or June, inflation is coming in lower, and growth is holding up.” 

Thielen also highlighted the U.S. presidential election cycles as a tailwind as they have historically coincided with Bitcoin halving years and have occurred alongside Bitcoin bull markets. The top crypto gained 152% in 2012, 121% in 2016, and 302% in 2020, reflecting an average increase of 192% during U.S. presidential election years.

According to MN Trading founder Michaël van de Poppe, Bitcoin will likely trade sideways over the next few months and could rally to $48,000 ahead of the halving in late April. 

#Bitcoin stuck in a range, markets are in an equilibrium.

I’d be looking at the range-bound construction for the coming months. 

Pre-halving a final run towards $48K, after that consolidation, before the breakout towards an ATH in Q3/Q4 of 2024. pic.twitter.com/jZznulSiwJ

— Michaël van de Poppe (@CryptoMichNL) February 5, 2024

Fed comments take a toll on altcoins 

The majority of altcoins in the top 200 traded in the red on Monday as Powell’s hawkish comments pushed many traders to de-risk. 

Daily cryptocurrency market performance. Source: Coin360

Helium Mobiel (MOBILE) was the main exception as the token increased by 18.2% after Coinbase announced that it would be listing the project soon. Ethereum Name Service (ENS) gained 10% after revealing a partnership with web registry firm GoDaddy. Ronin (RON) led the losers with a decline of 17.8%, followed by a loss of 8% for Render (RNDR), and a 7.2% decrease for Flare (FLR). 

The overall cryptocurrency market cap now stands at $1.63 trillion, and Bitcoin’s dominance rate is 51%.