© Reuters
Investing.com – The , and the cryptocurrency market in general, fell sharply ahead of the Fed meeting on Wednesday evening, a reaction in line with that of the US indices, despite a sharply negative reaction from the US Dollar.
The , which hit a high of $28,813 (the highest since June 11, 2022) shortly before the FOMC meeting, has indeed fallen to a low of $26,620, down 7.6% in less than two hours.
Rebounding to $27,300 at the time of writing, the cryptocurrency is posting a 2.5% 24-hour drop, but still maintaining a nearly 12% gain over one week.
Bitcoin goes off the rails following the Fed
As expected, the Fed raised its key rate by 25 basis points. However, it also stopped using the term “continued hikes” to refer to its rate hikes in the statement, suggesting the end of the cycle is near.
Moreover, the forecasts described by the dot-plot chart show that the Fed should only raise its rates once more, by 0.25%, by the end of the year, probably in May. Also note that Powell pointed out that the market is wrong to predict rate cuts as early as this year.
And it is precisely this message from Powell that seems to have negatively impacted cryptocurrencies. It is also interesting to note that on the forex, the reaction of investors was different.
Indeed, the Dollar has fallen, as beyond 2023, the Fed’s forecast suggests several rate cuts for 2024. Cryptocurrency investors therefore seem to have focused on the fact that the Fed will not cut rates. this year, while those in forex have been more focused on the prospect of rate cuts in 2024.
Technical thresholds to watch on Bitcoin
From a graphical point of view, it should be noted that the profile of Bitcoin remains generally bullish in daily data, despite the clear post-Fed correction.
The $28,000 threshold is now immediate resistance for BTC, ahead of yesterday’s high near $28,800, then the $29,000 threshold. Then, the major psychological threshold of $30,000 will come into focus.
On the downside, $27,000 and $26,600 are the first supports to take into account, before $26,000, then $25,200/$25,000, a threshold below which Bitcoin’s profile in daily data would become more uncertain.