After the recent speech by US Federal Reserve chairman Jerome Powell, there was a price firework on the stock market, from which Bitcoin also benefited. As a result, the BTC price has climbed to over $17,000.
At press time, Bitcoin was trading at $16,982. However, the joy could not last long. The price is currently just bobbing along at the level reached. In the meantime, there are even signs of a slight downward trend again.
In the 1-hour chart, investors should keep an eye on four levels. A fall below $16,727 could mean an erosion of the recent Powell gains. On the other side, a rise above the $17,250 level would clear the path towards the $17,800-$18,000 area.
Did The Market Misinterpret Powell?
The reaction of the Bitcoin market is actually also logical. Since the last meeting, Fed officials have repeatedly defended the restrictive monetary policy and demanded its continuation.
That Powell now said that “the time for moderating the pace of rate increases may come as soon as the December meeting” was a surprise. Still, the market overheard the hawkish comments.
Thus, Powell also said that the fight against inflation is far from over. Therefore, he said, the Fed must keep its policy at restrictive levels “for some time.”
Powell also was tired of emphasizing that the Fed still has a long way to go to bring inflation down and that they probably need “somewhat higher” interest rates than expected in the September projections.
Gold bug Peter Schiff commented:
Investors are no longer buying what Powell is selling. Today he was as hawkish as ever, but the dollar tanked, and gold & stocks rallied. Powell’s resolve to fight #inflation is contingent on a soft landing. Not only will the economy crash, it’ll be another financial crisis.
Bitcoin Faces Headwinds In December
Whether there will be a Christmas rally in December is likely to depend on various factors that will confront Bitcoin with serious headwinds.
First and foremost, the Fed meeting on December 14 and the release of the new CPI data a day earlier are likely to be key in determining whether there will be a green or red Christmas.
In addition, Bitcoin investors should keep an eye on further FTX contagion effects, especially Genesis Trading and DCG. If DCG indeed only has a liquidity issue and can solve it, it would be a major relief for the crypto market.
Also, recession fears are growing, but could take a back seat for the time…
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