Bitcoin (BTC) U-Turns on FED Chair Powell Policy Outlook

Key Insights:

• Bitcoin (BTC) slips back as the crypto market responds to FED Chair Powell’s Testimony on Capitol Hill.
• Demand for riskier assets left Bitcoin in the red.
• Downside risks remain as markets await the White House Executive Order.

It was a bearish day for Bitcoin (BTC) on Wednesday. Bitcoin briefly hit $45,000 levels with a day high of $45,070 before falling back to test support at $43,500.

Partially reversing a 2.87% gain from Tuesday, Bitcoin fell by 1.11% to end the day at $43,935.

It was another mixed session for the rest of the crypto top 10.

LUNA and SOL rose by 3.05% and 2.03%, respectively, to lead the way. BNB also avoided the red, up by 0.15%.

ADA (-2.49%), AVAX (-4.12%), and ETH (-0.98%) and XRP (-2.01%) struggled.

Bitcoin Fear & Greed Index Hits Reverse

Following Wednesday’s rise to 52/100 in response to Bitcoin’s bullish start to the week, the index slid back to 39/100 this morning. The reversal saw the index fall back into the “Fear” zone.

For the Bitcoin bulls, the index will need to move back through to 54/100 to bring $50,000 levels back into play for Bitcoin. A fall to sub-20/100 would deliver sub-$30,000 levels.

Once more, Bitcoin broke ranks with the NASDAQ 100 and broader market risk sentiment on the day. FED monetary policy was in focus on Wednesday, with FED Chair Powell delivering testimony on Capitol Hill. Talk of a more cautious move later this month spurred demand for riskier assets. Powell told lawmakers: “there are events yet to come and we don’t know what the real effect on the U.S. economy will be.” The FED Chair reportedly added that he favored a 25 basis point rate hike in March and then larger and more frequent rate hikes if needed.

Crypto market reaction to FED Chair Powell’s testimony was evident and in stark contrast to January’s market reaction to more hawkish than expected FOMC meeting minutes. Wednesday’s reaction further reinforces Bitcoin’s recent shift to a “risk-off” asset.

Away from FED monetary policy, downside risks linger. On the regulatory front, we are looking out for the White House Executive Order on cryptos.

Bitcoin Price Action

At the time of writing, Bitcoin was flat at $43,933.

Technical Indicators

Bitcoin will need to move through the $44,131 pivot to make a run on the First Major Resistance Level at $44,874. Bitcoin would need broader market support to break through to $44,500.

In the event of another extended rally, the Second Major Resistance Level at $45,813 and resistance at $46,500 would come into play. The Third Major Resistance Level sits at $47,495.

Failure to move through the pivot would bring the First Major Support Level at $43,192 into play. Barring an extended sell-off throughout the day, Bitcoin should avoid sub-$42,000 levels. The Second Major Support Level at $42,449 should limit the downside.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bullish signal. Bitcoin continues to sit well above the 50-day EMA. The 50-day EMA has pulled away from the 200-day after the bullish cross through the 200-day EMA. A bullish cross of the 100-day EMA through the 200-day EMA would bring the Major Resistance levels into play.

Avoiding the 50-day EMA, currently at $41,000, would support further upside.