Fed Chair Powell Drives Bitcoin (BTC) into Positive Territory

Key Insights:

• Going into the US session, market focus on Fed Chair Powell’s first day of testimony weighed on riskier assets.
• Powell’s testimony and the Q&A delivered riskier assets and the crypto market with brief support.
• Technical indicators are bearish, with bitcoin sitting below the 50-day EMA.

Following a modest 0.72% gain on Tuesday, bitcoin (BTC) was under pressure through the morning session.

Market angst weighed on riskier assets, with the fear of a global recession weighing ahead of today’s Fed Chair Powell testimony.

Through the morning session, BTC slid by 3.63% to a morning low of $19,947 before making a move.

Across the crypto market, the mood aligned with the NASDAQ 100 and WTI crude oil.

Sentiment improved, however, through Powell’s testimony, with the NASDAQ 100 and bitcoin hitting day highs before easing back.

Fed Chair Powell delivered brief market relief, despite the Fed’s commitment to bring inflation back to 2%, which pegged bitcoin back from a return to $21,000.

Fed Chair Powell Testimony Delivered Support to Riskier Assets

In line with market expectations, Fed Chair Powell discussed the need to continue hiking rates to bring inflation back to target.

According to FX Empire, Powell noted,

“We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.”

For riskier assets, Powell’s reference to the influence of incoming data and the economic outlook on the Fed interest rate path eased immediate concerns of a hard landing.

However, support for riskier assets was brief, with the FOMC projecting a Fed Funds Rate of 3.8% for 2023.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.54% to $20,811.

A bearish morning saw BTC fall to a low of $19,947.

BTC briefly fell through the First Major Support Level at $20,124 to test support at $20,000 before striking a high of $20,857.

BTC Technical Indicators

A move through the $20,912 pivot would bring the First Major Resistance Level at $21,484 and the Tuesday high of $21,695 into play.

BTC would need plenty of support for a return to $21,000.

An extended rally would test the Second Major Resistance Level at $22,266 and resistance at $22,500. The Third Major Resistance Level sits at $23,623.

Failure to move through the pivot would bring the First Major Support Level at $20,129 back into play. In the event of another extended sell-off, bitcoin could test the Second Major Support Level at $19,553 and support at $19,000.

The Third Major Support Level sits at $18,199.

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 $21,415. 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 $22,500.