BTC/USD Talking Points

• Bitcoin prices cling to support as Fed decision drives sentiment
• BTC/USD sell-off loses steam, prices temporarily stabilize around key psychological level of $36,000
• USD safe-haven appeal weighs on risk assets

Photo by André François McKenzie on Unsplash

Will The FOMC Pave The Way For Bitcoin?

A shift in risk sentiment currently continues to impact Bitcoin (BITCOMP) as investors hone in on the highly anticipated Fed interest rate decision and the press conference that follows.

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DailyFX economic calendar

With markets participants now pricing in a March rate hike, Fed Chair Jerome Powell is expected to outline the trajectory ahead for both tapering and interest rates in an effort to combat the effects of inflation and reduce the swollen balance sheet.

Although large stimulus packages have supported the recovery throughout the Coronavirus pandemic, monetary policy tightening, rising geopolitical risks (including tensions between Ukraine and Russia) and inflationary fears have contributed to a decline in the price of Bitcoin, Tech stocks (Nasdaq 100) and riskier assets which currently remain under pressure.

Bitcoin (BTC/USD) Technical Analysis 

The recent sell-off for BTC/USD temporarily stalled after bears failed to break below the $32,000 handle. Despite a prominent downward trend developing since the November 2021 all-time high, the descending channel currently remains in play as the 50% Fibonacci retracement level of the 2020 – 2021 provides both support and resistance for the imminent move at around $36,426.

If risk appetite continues to sour, bears may be offered the opportunity to drive prices back towards $32,000 which brings $30,000 and subsequently $28,000 into the spotlight.

Bitcoin Daily Chart

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Source: TradingView, Chart by Tammy Da Costa

On the contrary, if balance is restored and fears subside, Bitcoin could potentially revisit $38,000 with the next resistance zone residing at the key psychological level of $40,000.