© Reuters
Investing.com – Wednesday was a busy day for the , which first extended its rise to an early evening high of $18,346 before plunging to a low of $17,600 overnight Wednesday at Thursday.
BTC indeed benefited from the anticipation of a generally dovish Fed meeting, forecasts which were reinforced the day before in the face of the good surprise of US inflation below expectations, before plunging when the Fed is finally shown to be more cautious than expected.
Indeed, although the Fed as expected slowed the rate hike to 0.5%, the Fed statement, dot-plot chart and Jerome Powell’s speech displayed hawkish elements that undermined investor optimism, on cryptocurrencies as on other financial markets.
Why Bitcoin fell ahead of the Fed meeting?
In particular, the dot-plot chart, which describes the forecasts of Fed members in terms of rates, showed a median expectation of the final rate at the end of 2023 of 5.1%, against 4.6% in the previous projections for the month of september.
Separately, Powell said at the December 14 press conference:
“We could see higher rates for a longer period to hit the 2% inflation target.”
The Fed boss also said:
“It’s not so important now how fast we go…. It’s much more important to think about what the ultimate level is, and then at some point the question will become how much long we will remain restrictive.”
This seems to suggest that a high rate environment could set in over time, something that also weighed on Bitcoin and risk assets in general yesterday.
Turning to today, crypto traders’ attention will turn to the ECB meeting, which is also expected to raise rates by 0.5%. However, as was the case with the Fed, surprises are not ruled out in the Central Bank’s statement or in President Christine Lagarde’s speech following the rate announcement.
Finally, from a graphical point of view, the zone of 17,600/17,500 $ is the first potential support in the event of a continuation of the decline of the , before the psychological threshold of 17,000 $. On the upside, Wednesday’s low of $18,000 and high of $18,373, as well as the 100-day moving average currently at $18,709 will be the first potential supports.