Bitcoin (BTC) retreated and reversed its daily gains after the Federal Reserve announced a third consecutive 75 basis point (bps) interest rate hike on September 21.
Traders sold the news
The price of BTC decreased by about 6.5% from $19,950 to $18,660 after the Federal Open Market Committee statement. His decline mirrored a similar sudden correction in the US stock market, with the benchmark S&P 500 down 0.5% after the Fed update.
On the other hand, the 10-year US Treasury note yield rose to 3.6% after the Fed’s announcement from 3.56% five minutes earlier. Similarly, the yield on the 2-year Treasury note rose to 4% from 3.98% over the same timeframe.
The U.S. dollar index (DXY), which measures the greenback’s strength against a basket of major foreign currencies, rose to 111.57 for the first time in 20 years.
The Fed has published an updated “dot plot” of officials’ individual interest rate forecasts for the end of 2025. These forecasts point to further price increases going forward, with the 2022 target set at 4.4% and 2023 at 4.6%. .
Central bank officials said the policy rate will be 4.6% in 2023. Then it will decrease to 3.9% in 2024, and then decrease to 2.9% in 2025.
All indicators point to more pain for Bitcoin
After the Fed reform, the rise of the dollar and the fall of Bitcoin reflected investors Growing appetite for cash and cash-based instruments compared to riskier assets. Meanwhile, the central bank’s scorecard has hinted that investor sentiment will remain unchanged until the end of 2023.
Related: Bitcoin ‘knock’ warning as Fed rate hike decision looms – Dollar index hits 20-year high
Bitcoin prices may continue to suffer due to the Fed’s hawkish stance and its attempts to bring inflation down from its current level of 8.3%. Many analysts after the reform of the central bank It is mentioned BTC price may break below the technical support range below $18,000–$20,000, which the Fed may raise by another 75 bps before the end of the year.
I really don’t know how long this will be $BTC It can be supported pic.twitter.com/YAdkkB9Zww
— CRG (@MacroCRG) September 20, 2022
Bitcoin’s technical outlook appears similarly murky. In particular, the cryptocurrency is forming a bearish reversal pattern dubbed “head-and-shoulders.”As noted below, the profit target is set at around $14,000.
Conversely, a recovery from the head and shoulders support level of 18,800 could have Bitcoin eyeing $22,500 as its interim target.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business activity involves risk, you should do your own research when making a decision.