Bitcoin price slammed below $27K in the wake of the Fed's interest rate hike
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(Kitco News) - The Federal Reserve hiked interest rates by 25 basis points Wednesday, a move that largely aligned with expectations, sparking a bout of volatility in the crypto market and sending asset prices whipsawing across financial markets.
Prior to the Fed’s announcement, U.S. equities were higher on the day and saw a spike upwards as the announcement approached, only to crash into the red following Fed chair Powell’s press conference, ending a two-day win streak. At the close of markets, the S&P, Dow and Nasdaq were down 1.65%, 1.63%, and 1.60%, respectively.
Data provided by TradingView shows that, after trading near $28,300 during the morning session, Bitcoin (BTC) spiked to a high of $29,114 shortly before Powell’s presser, and then violently reversed course and plunged below the $28,000 and $27,000 support levels to hit a low of $26,810.
BTC/USD 4-hour chart. Source: TradingView
Prior to the afternoon’s events, Kitco senior technical analyst Jim Wyckoff wrote that “Prices are in a routine pause after hitting a contract high Monday. Bulls still have the solid near-term technical advantage amid a fledgling price uptrend in place on the daily bar chart.”
While Wyckoff suggested that “More upside is likely in the near term” in his morning Bitcoin update, the effects of Powell's comments on the market appear to have broken the “fledgling price uptrend” and given bears the opportunity to take control of the price action.
Consolidation following the interest rate hike
According to analysts at Eight Global, the recent ascent in Bitcoin price was a break out from its longest accumulation period in history. “This shows us the strength currently in the crypto market, and thus the confidence of market participants,” they wrote in a morning update ahead of the Fed’s interest rate hike.
“Currently, BTC has arrived at a strong resistance zone, namely the $28.5-32.5k zone. BTC will not pass through this easily, so this is a logical place for many to secure profits,” the analysts wrote. “Should BTC reject here, chances are we will see a correction towards the old range high. This zone around $25-25.5k will then start serving as support.”
BTC/USD 2-day chart. Source: Eight Global
Eight Global noted that if Bitcoin can manage to continue consolidating in the resistance zone, “chances are that it will eventually break through, and move towards $37-38K. This would mean another ~25% price rise.”
Following the announcement from Powell, Eight Global founder Michaël van de Poppe posted the following tweet as a follow-up to the morning update, saying that he “expects some consolidation before continuation” for Bitcoin.
#Bitcoin hit $28,700 and follows scenario 1, still.— Michaël van de Poppe (@CryptoMichNL) March 22, 2023
Powell will probably remain hawkish and do his standard thing, as he continued to hike with 25bps as well.
I think we'll be topping out for now and have some consolidation before continuation.
Interested at $25k. pic.twitter.com/ckWYqu5jkL
Altcoins get hammered
The downturn in Bitcoin hit the altcoin market hard, with most tokens in the top 200 plunging into the red for the day while a few projects managed to stay in the green due to improved fundamentals.
Daily cryptocurrency market performance. Source: Coin360
A 12.76% gain for iExec RLC (RLC) was the most notable increase on the day, while Gitcoin (GTC) saw its price increase by 12.48% and Blur (BLUR) gained 9.69%.
The overall cryptocurrency market cap now stands at $1.16 trillion, and Bitcoin’s dominance rate is 46.2%.