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Investing.com – After plunging overnight from Sunday to Monday, the rebounded more than $1,000 from a low of $18,318 yesterday morning to a high of $19,684 in the evening, but is down again this Tuesday morning, around $19,300 at the time of writing.
Recall that Bitcoin and most other cryptocurrencies are bearing the brunt of an increase in expectations in terms of Fed rate hikes since last Tuesday’s higher-than-expected US inflation figures.
The fate of Bitcoin is in the hands of the Fed
Indeed, the market is now considering a non-negligible probability that the Fed will raise its rates not by 0.75% as expected by the consensus, but by 1%. The currently bears witness to a 17% probability of this event occurring.
However, Fed rate hikes are negative factors for Bitcoin and risky assets in general, increasing the relative attractiveness of risk-free investments, penalizing the equity markets to which Bitcoin is correlated and generating expectations recession source of risk aversion.
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However, this defining impact that Fed policy has on BTC makes the current Bitcoin bear market fundamentally different from previous bear markets.
This is indeed the first time we have witnessed a quantitative crunch of such magnitude since the invention of bitcoin, and at this point, the most likely seems that the pressure remains bearish on cryptocurrencies at least until this that the Fed is signaling that it is done with rate hikes.
Bitcoin Technical Analysis: The Underlying Trend Remains Negative
From a chart perspective, the next short-term supports for Bitcoin are the $19,000 threshold, yesterday’s low near $18,300, and the 2022 yearly low marked on June 18 near $17,600. Then, few supports can be spotted before the key threshold of $15,000. On the upside, a return above $20,000 would be positive, but the first real chart hurdle is at $20,750/$21,000.
Finally, note that the daily chart of BTC/USD below still shows an unmistakably bearish background trend.
We can indeed clearly spot a bearish trend line visible since the all-time high of November 2021. It is moreover this trend line which stopped the rise of Bitcoin at the beginning of last week, sending it back into the downward leg in which we currently find ourselves.
A return above this downtrend line, currently located at around $21,700, will therefore be necessary to begin to question Bitcoin’s background bearish profile.
The daily chart also shows a fairly close relationship with the 100-day moving average, which more or less precisely stopped Bitcoin increases in recent months. This 100-day MA, currently at $21,375, will also be taken into account as a potential obstacle.