FED Chair Powell Spooks Cryptos with Rate Hike and Recession Talk

On Thursday, Bitcoin (BTC) fell by 2.14%. Following a 0.31% loss on Wednesday, BTC ended the day at $40,491.

A bullish start to the day turned sour as the markets responded to a scheduled Fed Chair Powell speech at the IMF.

Bitcoin had hit a day high of $42,997 to test resistance at $43,000 before tumbling to a day low of $39,865.

Elsewhere, AVAX (-4.00%), BNB (-3.25%), ETH (-3.03%), LUNA (-4.84%), and SOL (-3.63%) struggled.

On Thursday, Fed Chair Powell spoke at the Annual Economic Policy Conference National Association for Business Economics.

There were two key takeaways from the Powell speech. Firstly, the prospect of a fifty-basis point rate hike.

“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or in meetings, we will do so. 

And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”

Secondly, Powell talked of the challenges of bringing down inflation without bringing down the economy.

“I hasten to add that no one expects that bringing about a soft landing will be straightforward in the current context – very little is straightforward in the current context. My colleagues and I will do our very best to succeed in this challenging task.”

The combination of a more rapid move to policy-neutral and possibly beyond and the threat of recession weighed on riskier assets.

On Thursday, the NASDAQ 100 tumbled by 2.07%, with the futures in the red this morning to pressure the crypto markets further.

Bitcoin will need to move through the day’s $41,114 pivot to make a run on the First Major Resistance Level at $42,369. Bitcoin would need broader market support to return to $42,000 levels.

In the event of another extended rally, Bitcoin could test the Second Major Resistance Level at $44,252. The Third Major Resistance Level sits at $47,382.

Failure to move through the pivot would bring the First Major Support Level at $39,240 into play. 

Barring another extended sell-off, Bitcoin should avoid sub-$39,000. The Second Major Support Level sits at $37,985.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. Bitcoin sits below the 50-day EMA, currently at $41,065. 

This morning, the 50-day EMA pulled back from the 100-day EMA, testing support. The 100-day EMA pulled back from the 200-day EMA, BTC negative.

Previous Post Next Post