 | Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here! |
(Kitco News) - Financial asset prices trended down on Wednesday afternoon after Federal Reserve Chair Jerome Powell announced the latest 25 basis point hike in interest rates and signaled that another rate hike in June is a possibility if inflation metrics don’t improve by then.
Stocks were stuck in a holding pattern throughout the morning session as investors awaited the Powell press conference. Markets proceeded to sell off in the afternoon after the ‘hawkish pause’ comments from the Fed chair left many concerned about the need for future rate hikes. At the close of markets, the S&P, Dow and Nasdaq were all in the red, down 0.70%, 0.80%, and 0.46%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) price drifted lower throughout the trading day, hitting a low of $28,235 before spiking to a daily high of $28,915 shortly after Powell began speaking, only to once again pullback to support at $28,500.
BTC/USD 4-hour chart. Source: TradingView
The daily downtrend in spot BTC price resulted in May Bitcoin futures prices trading slightly lower in the early hours on Wednesday, according to Kitco senior technical analyst Jim Wyckoff, who noted that, otherwise, there’s “Not much new.”
“Trading remains choppy and sideways in a range,” Wyckoff said. “The bulls and bears are on a neutral overall near-term technical playing field. The direction in which prices move above or below the range, defined by resistance and support lines seen on the chart [below], will very likely be the direction of the next sustained trending price move.
BTC/USD 1-day chart. Source: Jim Wyckoff
According to Hong Fang, president of the OKX cryptocurrency exchange, “The fed's removal of guidance pointing to further rate increases suggests crypto prices may have further room to run. While volatility is possible in the short term given bank failures and macro uncertainty, crypto has exhibited good price resilience in recent months.”
Extended consolidations are common after spikes
Additional insight into the price action for BTC over the past months was provided by the analysts at Eight Global, who noted that “We consistently observe that whenever BTC experiences sharp upward or downward movements, it is followed by a long and boring consolidation period.”
Bitcoin has already seen two such periods in 2023. The initial climb to $21,000 in January was followed by two months of sideways trading before it surged above $28,000 in early March, where it now trades.
“During this consolidation, we have also noticed a continuous increase in Open Interest, indicating that many market participants are positioning themselves by using leverage,” Eight Global wrote. “As a result of this development, the spikes in both directions have become more extreme, as more liquidations occur than usual.”
Moving forward, Eight Global observed that BTC “is struggling with a strong resistance zone located between $30-32k” as there are “many sellers operating in this region.” They also noted that this is “a rational level to take profits given the consolidation seen on the left side of the chart.”
BTC/USDT 1-day chart. Source: Eight Global
“Therefore, it is logical for the price to stagnate at this point,” the analysts said. “However, as long as the price consolidates here, there is nothing to worry about, as consolidation beneath resistance can be seen as a bullish signal.”
Zooming in on the 4-hour chart, Eight Global said that “there is price compression taking place,” with “Higher lows and lower highs” being made. “At some point, the price will have no more room to continue this compression structure, and there will be a decision moment. During this decision moment, the price will break out either upwards or downwards,” they warned.
BTC/USDT 4-hour chart. Source: Eight Global
“If the price breaks out upwards, there is a high chance that we will make new local highs and continue the uptrend. However, if we break out downwards and make a lower low, the uptrend structure will be broken, and there is a high chance that we will trend towards $25k,” Eight Global concluded.
Altcoins slide into the red
The weakness seen in all financial markets was pronounced in the altcoin market as 90% of the tokens in the top 200 were in the red for the day.
Daily cryptocurrency market performance. Source: Coin360
RSK Infrastructure Framework was the one standout token for the day, putting on a gain of 14.76% to trade at $0.142 while Rocket Pool (RPL) and Curve DAO Token (CRV) recorded gains of 5.5%. The biggest loser on the day was Sui (SUI), a newly launched token that saw its price fall 71% from its recent high, and Radicle (RAD), which fell by 22.14%.
The overall cryptocurrency market cap now stands at $1.173 trillion, and Bitcoin’s dominance rate is 46.8%.
