Bitcoin Analysis Following Fed Chair’s Comments
Bitcoin has recently taken a hit, especially after Federal Reserve Chairman Jerome Powell made some hawkish remarks. Without a doubt, his comments raised eyebrows, particularly when he downplayed expectations for an interest rate cut in December.
Looking at the price chart, BTC has experienced selling pressure. However, it still holds above a crucial marker—the 200-day simple moving average (SMA) around $109,250. Right now, BTC is trading at approximately $111,000, showing some recovery from the recent ups and downs in the market.
For those bullish on Bitcoin, it’s somewhat reassuring that the price remains above this 200-day SMA, which is often seen as a long-term indicator of market trends. But does this reassurance suffice? I would venture to say probably not.
Prices are still lagging below the Ichimoku cloud, which is an important technical indicator for gauging short-term market trends. In general, traders view price movements under the cloud as bearish, at least in the short term.
The longer Bitcoin remains beneath the cloud, the higher the risk of dropping below that significant 200-day SMA, and potentially, the psychologically important $100,000 mark. This situation is reminiscent of February’s downturn, which saw prices tumble to $75,000 shortly after falling below key supports.
This downside threat is compounded by a couple of factors. First, there’s a bullish crossover happening with the 50-day and 100-day SMAs of the dollar index, indicating ongoing strength for the USD. This could potentially lead to a bullish double-bottom breakout, marking a shift in the long-term downtrend observed since January.
Additionally, the 10-year Treasury yield has bounced back above 4%, which reaffirms the end of a previous downtrend, as suggested by a series of strong weekly candlesticks. A rise in yields at the longer end usually supports the dollar and can weigh down riskier assets like Bitcoin.
Post-Powell’s comments, there’s an uptick in Deribit-listed BTC puts trading at a 4%-5% volatility premium, indicating escalating concerns about declining prices.
Collectively, these elements create a somewhat challenging environment for Bitcoin bulls. To regain some confidence and build momentum for future growth, a decisive breakthrough above the $116,000 Ichimoku cloud will be crucial.
