Bitcoin Setup – BTC/USD Crawls Along Support After Hawkish Fed
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Bitcoin, USD Talking Points
- Bitcoin prices remain vulnerable to risk aversion
- BTC/USD lingers around key psychological support at $36,000
- USD strengthens after perceived hawkish commentary from the Fed (Federal Reserve)
Bitcoin Indecision Persists After Hawkish Tilt From the Federal Reserve
However gains were quickly relinquished after Powell’s speech, driving price action back towards the key psychological support level of $36,000.
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In the wake of the November all-time where Bitcoin demonstrated characteristics akin to gold, acting as a hedge against inflation, it appears that isn’t the case may pose as an additional hinderance for bullish momentum.
Although large stimulus packages have supported the recovery throughout the Coronavirus pandemic, monetary policy tightening, rising geopolitical risks and inflationary fears have contributed to a decline in the price of Bitcoin, Tech stocks (Nasdaq 100) and riskier assets which currently remain under pressure.
Bitcoin (BTC/USD) Technical Analysis
At the time of writing, BTC/USD is currently trading along the 50% Fibonacci retracement level of the 2020 – 2021 move at $36,264. After testing the $32,933 level on Monday, bulls were able to recover a portion of losses before facing a wall of resistance at $36,000.
While the downward trajectory currently remains intact, the CCI (commodity channel index) continues to threaten oversold territory.
Bitcoin (BTC/USD) Daily Chart
Source: TradingView, Chart by Tammy Da Costa
A break below $32,000 keeps the door open for a move down to the next level of Fibonacci support at $28,729. If this those levels are tested in short order, $20,000 looms, the lowest level since December 2020.
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.