Bitcoin is finding support and may be charting a higher trough. However, cryptocurrencies are under pressure as the Fed looks to tighten aggressively. $40,000 is the current psychological support level. Market participants expect a 50bps hike in May and the start of the Fed's balance sheet run-off at $95bn per month. Moreover, it is looking likely the Fed will deliver another 50pbs increase in June.
Yesterday saw a higher headline CPI at 8.5%, but moderation in the core number. This easing may suggest that a peak is in sight for inflation; however, we need more evidence, in this regard. Therefore, since higher rates and contraction in liquidity are dollar supportive, bitcoin is likely facing headwinds, in the near-term.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.