(Kitco News) - Federal Reserve Chair Jerome Powell revealed that the central bank will be raising the benchmark interest rate level by another 50 basis points on Wednesday, a move that largely aligned with the expectations. The crypto market had a “sell the news” type reaction to the announcement as prices largely trended down after the decision was revealed.
There was a similar response in the traditional markets, as the major indices fell into the red after being in the green prior to the announcement from Powell. At the close of markets, the S&P, Dow and Nasdaq all finished in the negative, down 0.61%, 0.42%, and 0.76%, respectively.
Data from TradingView shows that Bitcoin (BTC) price underwent a bit of a whipsaw in response to the announcement, with the top crypto spiking to an intraday high of $18,377 only to plunge to a low of $17,663 in a matter of hours before bulls bid it back to support above $17,800.
BTC/USD 4-hour chart. Source: TradingView
The spike to $18,377 marked a five-week high for the top crypto according to Kitco senior technical analyst Jim Wyckoff, who noted that “This week’s price action has produced a bullish upside “breakout” from a choppy and sideways trading range on the daily bar chart, to suggest a price uptrend will develop.”
Moving forward, “Bulls have the near-term technical advantage and have momentum on their side,” Wyckoff said, in a possible sign that the worst of the crypto winter may now be in the past.
Look for a retest of $17,200
The daily chart for Bitcoin shows that Wednesday's move higher has lifted it back into the range it was trapped in from June until early November when the collapse of FTX sent price plunging.
BTC/USD 1-day chart. Source: Eight Global
Eight Global founder Michaël van de Poppe noted that the move back into this range for Bitcoin was “very important for further upwards momentum” in his latest newsletter to subscribers.
“Within the range we can see that we have a big inefficiency leftover from all the chaos that happened over the month of November. Inefficiencies tend to work as a magnet for the price, filling up the inefficiency would cause the chart to rebalance itself again,” Poppe said. “Getting positive signs in tonight's press conference would probably cause the price to go towards at least $18.6K.”
While the market initially responded positively to the announcement from Powell, a more hawkish stance emerged as the Fed chair elaborated on the central banks perspective, which prevented Bitcoin from reaching Poppe’s $18,600 target.
Moving forward, “The main area of interest for a long is the region around $17.2K,” according to Poppe, who suggested that “Coming back towards this level could give us a clean support/resistance flip.”
And in a message meant for the bears out there calling for new lows, Poppe posted the following tweet adding context to the weakness seen in the market over the past month and a half.
The markets fell from $20K to $15.6K due to the FTX collapse.
— Michaël van de Poppe (@CryptoMichNL) December 14, 2022
We're currently trading at $18K, slightly higher than the low in June.
I understand the bearish thesis, but this is honestly a sign of strength for #Bitcoin.
A mixed reaction in the altcoin market
The altcoin market’s response to today’s interest rate announcement from the Fed was mixed, with half the market seeing gains on the day while the other half was in the red.
Daily cryptocurrency market performance. Source: Coin360
The best performances of the day included Digibyte, which gained 20.88%, a 10.93% increase in the price of Toncoin (TON), and an 8.53% gain for BinaryX (BNX)
The overall cryptocurrency market cap now stands at $867 billion, and Bitcoin’s dominance rate is 39.5%.
