Fed Chair Powell hit the global financial markets with a double whammy on Thursday, talking of economic woes and rate hikes in tandem.
On Thursday, Bitcoin (BTC) fell by 2.14%. Following a 0.31% loss on Wednesday, BTC ended the day at $40,491.
A bullish start to the day turned sour as the markets responded to a scheduled Fed Chair Powell speech at the IMF.
Bitcoin had hit a day high of $42,997 to test resistance at $43,000 before tumbling to a day low of $39,865.
Elsewhere, AVAX (-4.00%), BNB (-3.25%), ETH (-3.03%), LUNA (-4.84%), and SOL (-3.63%) struggled.
ADA (-2.88%) and XRP (-2.53%) saw relatively modest losses.
On Thursday, Fed Chair Powell spoke at the Annual Economic Policy Conference National Association for Business Economics.
There were two key takeaways from the Powell speech. Firstly, the prospect of a fifty-basis point rate hike.
Discussing restoring price stability, Powell said,
“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or in meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”
Secondly, Powell talked of the challenges of bringing down inflation without bringing down the economy.
Concerning growth, Powell said,
“I hasten to add that no one expects that bringing about a soft landing will be straightforward in the current context – very little is straightforward in the current context. My colleagues and I will do our very best to succeed in this challenging task.”
The combination of a more rapid move to policy-neutral and possibly beyond and the threat of recession weighed on riskier assets.
On Thursday, the NASDAQ 100 tumbled by 2.07%, with the futures in the red this morning to pressure the crypto markets further.
At the time of writing, Bitcoin was down by 0.50% to $40,287.
Bitcoin will need to move through the day’s $41,114 pivot to make a run on the First Major Resistance Level at $42,369. Bitcoin would need broader market support to return to $42,000 levels.
In the event of another extended rally, Bitcoin could test the Second Major Resistance Level at $44,252. The Third Major Resistance Level sits at $47,382.
Failure to move through the pivot would bring the First Major Support Level at $39,240 into play. Barring another extended sell-off, Bitcoin should avoid sub-$39,000. The Second Major Support Level sits at $37,985.
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 $41,065. This morning, the 50-day EMA pulled back from the 100-day EMA, testing support. The 100-day EMA pulled back from the 200-day EMA, BTC negative.
A move through the 50-day EMA would support a return to $42,000 levels.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.