Bitcoin (BTC) and Ethereum (ETH) investors experienced a sense of uncertainty in May as they grappled with the US debt ceiling dilemma and the aftermath of the banking crisis. During this period, market participants closely monitored the Federal Reserve’s potential decision to halt its interest rate hikes.

The prevailing uncertainty had a significant impact on Bitcoin (BTC), which encountered a decline of nearly 7%, ultimately closing May at $27,200. In contrast, Ethereum remained relatively stable, exhibiting a minor increase of approximately 0.25% to reach $1,875 per token.

On June 2, relief swept through the investment community as the US Senate successfully passed legislation to suspend the debt ceiling and enforce restrictions on government spending, effectively averting the looming specter of a potential default scenario. Consequently, investors diverted their attention towards perceived “safe haven” assets such as the US dollar.

The US dollar index (DXY), which gauges the strength of the greenback against a basket of leading foreign currencies, experienced a decline of more than 1% due to the debt ceiling drama. In contrast, Bitcoin responded positively to the news on June 2, surging by nearly 1.5% to approximately $27,200.

The primary headline that is expected to shape the price trajectory of Bitcoin and Ethereum in June 2023 revolves around the Federal Reserve’s potential decision to pause its rate hikes.

This decision is largely influenced by the cooling down of inflation, which dipped to 4.9% year-over-year in April 2023 from its peak of 9.1% the previous year. Nevertheless, this figure still falls significantly short of the Fed’s desired target of 2%. Consequently, Fed Chairman Jerome Powell has expressed caution about implementing excessive rate hikes amidst concerns about the banking crisis.

The upcoming release of the next inflation data on May 13 will be closely watched. If consumer prices experience a notable rise, it is highly likely that the Fed will continue its rate hikes. However, if the data indicates a slowdown in inflation, the markets can anticipate a potential pause in the rate hikes. As a result, Bitcoin and Ethereum may experience cautious trading throughout the first half of June 2023.

For example, Bitcoin may continue to trade within the boundaries defined by its short-term ascending trendline support and the horizontal trendline resistance near $27,500. A similar scenario could unfold for Ethereum, with its price fluctuating between its ascending trendline support and horizontal trendline resistance near $1,900 during the initial weeks of June 2023.

Subsequently, investors should anticipate that Bitcoin and Ethereum will embark on a significant trend, which will be heavily influenced by the Federal Reserve’s rate decision.

If the Fed opts for a pause, Bitcoin in June 2023 may surpass the $27,500 mark and aim for a surge towards $30,000. Conversely, the implementation of a rate hike may pose a risk, potentially driving the price of BTC below its ascending trendline support and towards the $25,000 range.

In conclusion, the cryptocurrency market is bracing itself for significant developments in June 2023, with the Federal Reserve’s guidance on Bitcoin and Ethereum poised to shape the trajectory of these digital assets. As investors closely monitor the inflation data and await the Fed’s rate decision, uncertainty lingers in the market. While Bitcoin and Ethereum may experience cautious trading in the first half of June, a potential rate hike pause could provide a boost to these cryptocurrencies. Bitcoin has the potential to rally beyond $27,500 and target $30,000, while a rate hike could exert downward pressure, pushing it closer to $25,000. The dynamics of Ethereum will also be closely intertwined with the Fed’s decision, with the price oscillating between its support and resistance levels. As the cryptocurrency market continues to evolve, investors and enthusiasts alike eagerly await the Federal Reserve’s guidance, which will undoubtedly have a lasting impact on the future of Bitcoin and Ethereum.