Bitcoin Price Prediction Bears Eye Sub-$19,000 as Sell-Off Resumes

·4 min read

Key Insights:

  • On Wednesday, bitcoin (BTC) rebounded from a day low of $20,084 to wrap up the day at $22,567 levels.

  • Riskier assets found brief relief from Fed Chair Powell, who looked to limit the impact of the largest rate hike since 1994. The market has since digested and responded accordingly.

  • Technical indicators are bearish, with bitcoin sitting well below the 50-day EMA.

On Wednesday, bitcoin (BTC) rose for the first time in nine sessions. Bitcoin ended an eight-day losing streak, rising by 2.03% to end the day at $22,567.

Early in the session, bitcoin tested support at $20,000, with a day low and a new current year low of $20,084 before a Fed-fueled recovery.

A NASDAQ 100 rally supported the bitcoin recovery on the day, with the gains coming despite the Fed hiking the Federal Funds Rate by 75 basis points to 1.75%. It was the biggest rate hike since 1994, with the Fed clearly stating its intent to curb inflation at any cost.

Going into today’s session, bitcoin failed to break from the NASDAQ 100, with the correlation firmly in place.

Bitcoin Wake Up to a New Reality on Thursday

On Wednesday, the Fed hiked the Federal Funds Rate by 75 basis points to curb inflation.

While the global financial markets took the move in their stride on Wednesday, the FOMC statement delivered a warning…

In the FOMC statement, the Federal Open Market Committee stated,

“Inflation remains elevated, reflecting support and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”

The FOMC touched on the Ukraine war and COVID-related lockdowns in China and their contribution to upward pressure on inflation and the further exasperation of supply chain disruptions.

Looking ahead, the FOMC anticipates that continued increases in the target range will be appropriate.

On the issue of inflation, the FOMC stated,

“The Committee is strongly committed to returning inflation to its 2% objective.”

With inflation at a 40-year high, 75 basis point rate hikes could be more frequent than previously highlighted.

With the war in Ukraine showing no signs of ending, it will take time for supply chain disruption to ease and for trade to find its new equilibrium.

The FOMC economic projections reflected this outlook. The Fed revised down growth projections while revising up the Federal Funds Rate projections, as shown below.

FOMC Projections Q2
FOMC Projections Q2

It was a bad combination for any market, and more so with a Fed committed to returning inflation to its 2% target at any cost. In May, the US annual rate of inflation hit 8.6%, up from 8.3% in April.

At the time of writing, the NASDAQ 100 Mini was down 324.25 points.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 6.04% to $21,204.

A mixed start to the day saw bitcoin strike a morning high of $22,961 before hitting reverse.

Falling short of the First Major Resistance of $23,514, bitcoin slid to a late morning low of $20,850.

Finding support at the First Major Support Level at $20,857, bitcoin returned to $21,200.

BTCUSD 160622 Daily Chart
BTCUSD 160622 Daily Chart

Technical Indicators

A move back through the $21,801 pivot would bring the First Major Resistance Level at $23,514 into play.

BTC would need plenty of support to break out from today’s high of $22,961.

An extended rally would test the Second Major Resistance Level at $24,458 and resistance at $25,000 .

Failure to move back through the pivot would bring the First Major Support Level at $20,857 in play. In the event of another extended sell-off, bitcoin could test the Second Major Support Level at $19,131 and support at $19,000.

BTCUSD 160622 Hourly Chart
BTCUSD 160622 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. Bitcoin sits below the 50-day EMA, currently at $25,284. Today, the 50-day EMA slid back from the 100-day EMA. The 100-day EMA fell back from the 100-day EMA, bitcoin price negative.

A breakout from $23,000 would give the bulls a run at the 50-day EMA.

BTCUSD 160622 4 Hourly Chart
BTCUSD 160622 4 Hourly Chart

This article was originally posted on FX Empire