Bitcoin (BTC) Hit Reverse in Response to Fed Chair Powell Testimony

Key Insights:

• On Wednesday, bitcoin (BTC) slid by 3.60% to end the day at sub-$20,000 for the first time since Saturday’s sell-off.
• Fed Chair Powell’s testimony on Capitol Hill hit riskier assets, with cryptos and crude reflecting investor fears of a US recession.
• Technical indicators are bearish, with bitcoin sitting below the 50-day EMA.

On Wednesday, bitcoin (BTC) slid by 3.60%. Reversing a 0.72% gain from Tuesday, bitcoin ended the day at $19,954. Bitcoin last ended the day at sub-$20,000 on Saturday, June 18.

A recovery from sub-$20,000 saw bitcoin rise to an afternoon high of $20,863 before hitting reverse.

However, falling short of $21,000, bitcoin slid through the First Major Support Level at $20,127 to a low of $19,756.

Despite finding late support, the First Major Support Level pegged bitcoin back.

Risk aversion weighed on bitcoin and the global financial markets, with the NASDAQ 100 and WTI crude ending the day in the red.

At the time of writing, the NASDAQ 100 Mini was down 34.25 points, with risk aversion sending WTI down a further 2.07% to 103.99.

However, bitcoin continued to decouple from the NASDAQ 100 this morning, following Wednesday’s heavier losses. On Wednesday, the NASDAQ slipped by just 0.15%.

Bitcoin Fear & Greed Index Holds Steady Despite Powell Testimony

After recovering from sub-10/100 levels on Wednesday, the Fear & Greed Index held steady at 11/100 this morning.

Despite the hold, the Index remained deep in the “Extreme Fear” zone, reflective of headwinds that plague the crypto market.

Powell’s Wednesday testimony reaffirmed investor fears of a US recession, with the Fed Chair unable to assure a soft landing to the Fed’s policy plans to bring inflation back to target.

Bitcoin had found initial support in Powell’s comments that the Fed would consider incoming data and the economic outlook at each policy meeting. However, the relief was brief, with Powell highlighting the risks to the US economy.

Near term, market volatility will likely persist, with the markets needing to digest incoming data to assess the impact of the Fed’s rate hikes. However, patience is required, with inflation unlikely to slide back toward target any time soon.

Persistent inflation and deteriorating economic conditions are plausible outcomes that would further impact bitcoin and the broader market.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 1.74% to $20,304.

A mixed start to the day saw BTC fall to an early low of $19,870 before striking a high of $20,474.

BTC left the Major Support and Resistance Levels untested early on.

Technical Indicators

Avoiding the $20,193 pivot would bring the First Major Resistance Level at $20,624 and the Wednesday high of $20,863 into play.

BTC would need plenty of support to breakout from this morning’s high of $20.474 and $20,500.

An extended rally would test the Second Major Resistance Level at $21,296 and resistance at $21,500. The Third Major Resistance Level sits at $22,405.

A fall through the pivot would bring the First Major Support Level at $19,520 into play. In case of another extended sell-off, bitcoin could test the Second Major Support Level at $19,084 and support at $19,000.

The Third Major Support Level sits at $17,977.

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 $21,246. Today, the 50-day EMA fell back from the 100-day EMA. The 100-day EMA eased back from the 100-day EMA, bitcoin price negative.

The bitcoin pullback from the 50-day EMA on Tuesday brought $20,000 support back into play.

A move through the 50-day EMA would give the bulls a look at $21,500.