Bitcoin Harmed by the Fed’s Aggressive Stance

  • BTCUSD
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BTC/USD Analysis

With the help of the soft CPI report from the US, Bitcoin had managed to rise to the highest in around a month last week and to cover as much as 50% from its November high/low slump, in line with our previous analysis.

Then came the US Fed, which despite slowing the pace of is rate-hike cycle, was very hawkish and pointed to further tightening in order to restore price stability. More to it, officials also raised their expectations for the appropriate policy path, now expecting rates to peak at a median of 5.1%, which implies another 75 basis point worth of hikes. [1]

BTC/USD dropped as result, while fears around the crypto industry after the recent collapse of FTX continue to weigh. Bias remains on the downside and November's two-month lows (14,455) are in the spotlight, although bears will likely need fresh impetus to break below them.

On the other hand, markets don't seem convinced that the Fed will actually raise rates by as much as it projection suggests, while the Relative Strength Index points to oversold condition. As such, BTC/USD may find the opportunity to push back to the 17,500-17,693 region. However, it does not inspire much confidence for higher highs and sustained strength past the 50% Fibonacci (11,384) and the daily Ichimoku Cloud.

Nikos Tzabouras

Senior Market Specialist

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

1

Retrieved 01 Feb 2023 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20221214.htm

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