Bitcoin Resilient to Powell’s Hawkish Message
BTC/USD Analysis
Bitcoin has been having a bad year amidst a broader crypto rout and US Dollar strength on the back of the Fed's aggressive tightening cycle, which has led to 375 basis points worth of rate hikes since the March lift-off.
On Wednesday, the US central bank made another outsized increase and hinted at smaller moves in the future, as it will be taking into account "the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments". [1]
However, Chair Powell delivered a hawkish message, ruling out a pause and highlighting the need for "ongoing rate increases". This commentary boosted the greenback, sending EUR/USD and GBP/USD lower. BTC/USD also ended the day lower, but shows resiliency, trading in positive territory today.
Over the last few days, the popular cryptocurrency has been trading around the 50% Fibonacci of the September high/low drop and the EMA200, which places near-term bias on the upside. Given the resiliency to the Fed's latest hawkish messaging, BTC/USD has the opportunity to push for the 76.4% Fibonacci (21,698), but we are cautious for a broader advance beyond 22,798.
Despite today's upbeat mood, monetary policy remains supportive for the US Dollar, which works against Bitcoin and keeps it in precarious position. As long as it does not make progress, there is risk for a return below the daily Ichimoku Cloud (at around 12,890), although it is early to talk about a steeper decline that would challenge 17,566.
Markets now turn to today's jobs report form the US, that could determine the next leg of the move.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 11 Dec 2023 https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20221102.pdf |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.