Bitcoin and Crypto Turn Jittery on Fed Chair’s Interest Rate Cut Comments

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At a panel talk on April 16, Jerome Powell, the Federal Reserve chairman, shared his perspective on adopting a cautious stance in monetary policy in the future. He further pointed out that the recent Consumer Price Index figures have not provided any definitive signal suggesting an imminent approach to the Fed’s desired inflation rate of 2%.

Powell stated that given the robust labor market conditions and advancements in inflation, it makes sense to maintain the rigorous monetary policy at present and observe how the data unfolds before considering any additional actions.

In the final week of March, the Consumer Price Index (CPI) surprised us with a higher-than-projected figure of 3.5%. Additionally, there was a greater-than-predicted job gain of 303,000, and retail sales grew by 0.7% instead of the forecasted 0.4% increase.

The robust labor market and high consumer spending indicate that the economy is able to bounce back strongly, putting pressure on the Federal Reserve to keep interest rates unchanged or even raise them. Shortly after Fed Chair Powell’s remarks on Tuesday, Bitcoin and the cryptocurrency market experienced significant selling, causing their prices to drop.

The price of Bitcoin dropped dramatically to $61,500 before bouncing back. Similarly, the entire altcoin market experienced significant selling pressure on Tuesday. Historically, Bitcoin and the broader crypto market are known for their volatility in response to changes in interest rates due to their classification as riskier assets. Furthermore, this recent decline occurs just prior to the upcoming fourth Bitcoin halving on April 20.

Bitcoin Stages a Recovery

After Powell’s remarks caused Bitcoin’s price to plummet instantly, it bounced back strongly a few hours later. Currently, Bitcoin’s price has reclaimed its crucial support level of $62,000 and is now trading at $63,499, giving the cryptocurrency a market capitalization of $1.25 trillion.

According to Santiment, a data provider for on-chain information, the balance between bullish and bearish sentiments is tipping in favor of the bears. This situation has been causing fear, uncertainty, and doubt (FUD) among traders. However, Santiment notes that trader FUD often results in a price rebound, which seems to have occurred following the recent price correction.

The proportion of bullish to bearish remarks about Bitcoin and Ethereum is notably pessimistic following their recent drops to $61,500 and $2,890 respectively over the weekend. The fear among traders, or FUD, has already taken effect, causing markets to react, but they are now recovering.

— Santiment (@santimentfeed) April 16, 2024

Market analyst Ali Martinez, who is widely followed, points out that the price of Bitcoin has been moving within a channel, with the lower end at around $61,000 and the upper end at approximately $72,400. A break above or below either level could potentially trigger further price movements in that direction.

Let’s keep it simple and only focus on support and resistance!
Based on its current trend, Bitcoin seems to be moving within a parallel channel. Therefore, the price of $61,000 serves as a significant support level, while $72,400 functions as a noteworthy resistance level.
If $BTC breaks below support, it could…
— Ali (@ali_charts) April 16, 2024

Based on Ali Martinez’s analysis, if Bitcoin (BTC) drops below its support levels, it could potentially fall to $56,200 or even $51,600. Conversely, should Bitcoin break through its resistance levels, the possible next price milestones would be $79,000 and $86,000.

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2024-04-17 12:19