Bitcoin price has invalidated a brief bullish bump observed after the release of the United States Consumer Price Index (CPI) data. The CPI data showed that inflation eased in the nation, which was supposed to be a positive catalyst for Bitcoin and crypto markets. However, a surprise sell-off occurred when the Federal Reserve announced a pause in the historic interest rate hikes for the first time since March 2022. The largest cryptocurrency fell by at least 4% following the Fed’s decision, with the price dropping to $24,835 and the cumulative seven-day losses reaching 5.1%.
The halt in interest rate hikes was expected by 76% of economists surveyed by Dow Jones, leading analysts to believe that it would boost Bitcoin and crypto prices. Yet, the Fed’s signaling of possible future increases dampened investor excitement, particularly for risk assets like Bitcoin and cryptocurrencies. John Gilbert, a Market Analyst at eToro, explained that investors had been building positive sentiment expecting inflation to fall and interest rates to peak before eventually being cut.
Despite moving in the right direction, Jerome Powell’s comments indicate that the rates could stay higher for longer, potentially impacting Bitcoin negatively. Bitcoin bulls have been aggressively searching for support, but the hold above $25,000 has been weak. The Moving Average Convergence Divergence (MACD) indicator’s technical outlook suggests that the declines might continue into the next week, while the On Balance Volume (OBV) indicator shows that sellers currently have the upper hand. The sell signal from the MACD and the more substantial outflow of money from BTC markets compared to inflow might imply that Bitcoin price is far from finding credible support.
Crypto analyst Captain Faibik (on Twitter) believes that the Bitcoin price dip below $25,000 could be a bear trap. If it turns out to be a false swing south, traders could potentially experience strong rebounds as Bitcoin sweeps through new liquidity. If BTC can reclaim resistance at $26,700, it might rally toward $30,000. However, investors have been warned to be cautious and consider potential declines to $20,000 if bears return in full force.
Source: Coingape
