Market Analysis, Updates, News & Reviews

In today’s episode I discuss the latest hot topics in crypto:
►FED Raises Interest Rates To Levels Unseen In 16 Years
►Bitcoin Chart Suggests Weak Buying Pressure, Is Another Rally Coming or A Dip?

Just three days ago The U.S. Federal Reserve yet again raised interest rates to curb inflation, now reaching the highest levels in 16 years after the central bank raised its benchmark rate a quarter percent to 5.1%.

The crypto market had a mixed reaction to the hike, with Bitcoin and Ethereum gaining 2% after a minor dip post-announcement. Other major altcoins remain muted on the hourly charts. The Federal Reserve interest rate hike will rein in individual and corporate spending with a knock-on effect on risky assets, such as cryptocurrencies. Bitcoin has been touted as a hedge against rising inflation, however, it responds to reduced liquidity in the same way as other risky assets. The Fed’s ongoing increases in the rate “will be appropriate”. The interest rate hike has also caused some major stock indices to sink, but the broader market largely looks unchanged after a short pullback. However, there’s a concern that ten rate hikes in one year may cause the economy to slow down or even trigger a recession. Regional U.S. banks may be exposed to systemic risks as a result of the increase and according to a recent report the uninsured depositors at many regional banks are still withdrawing money, straining the system. This could be a possible reason the crypto markets didn’t take the news too badly

The U.S. Federal Reserve has raised the interest rates in attempt to curb inflation, which has slowed down in the past few months. Consumer inflation in the U.S. decreased in March but remained at 5%, significantly less than the 6% seen in February. Some analysts had predicted that the Fed would stop tightening monetary policy due to the banking crisis and this latest increase by just 25 basis points is noticeably less than the 50 or 75 basis points increase that we’ve seen several times over the course of last year, indicating that perhaps the end of the tightening is coming.

The Fed’s efforts to curb inflation by slowing the economy with the most aggressive series of rate hikes since the 1980s are beginning to show results. Construction and manufacturing, which are particularly sensitive to borrowing costs, have downshifted. And after a strong January, consumer spending slowed sharply in February and March.

Meanwhile, the Hong Kong Monetary Authority (HKMA) also increased interest rates on Thursday, and many countries in the European region are also increasing interest rates, so the US is not alone in the struggle economically speaking.

The crypto markets are yet to make a more pronounced move, so far I’m seeing a rare show of indecisiveness – the price is up from a few days ago, but in the past 24 hours Bitcoin and the rest of the top 20 mcap markets are pretty stable.

The weekly timeframe on most coins is still in overbought territory and I expect that at least for another week or so, we will be seeing consolidation and possibly more downside price action.

This is still a positive though, it shows that Bitcoin is finding support around the 28k level, with the mid-27k being the lower end of the support zone. Another challenge of this support is to be expected. If we break this support, then a drop to 24k is very likely, but until then, we are still making higher highs & higher lows – an indication of an uptrend. Being able to defend the current support levels would mean that we are gearing up for another rally on the upside, so this is why a consolidation for the next week or so, will be a good thing. Any small pullbacks are okay, as long as we don’t hit the support zone hard.

Looking at the overall crypto market capitalization chart, we seem to be in a resistance zone. A rejection from here would mean a drop – most likely in Bitcoin, which will be followed by all the alts, so I’m keeping an eye on that chart too.

A pullback all the way to that support trendline is quite possible, even if it’s just a short-term dip. We printed a peak recently – a couple of weeks ago and since then we’re in decline. I see a head and shoulders forming – not very pronounced, but still, it’s a bearish looking pattern.

Lastly, looking at the shorter term, the 12h chart of Bitcoin is going to show us what’s coming for the next few days. This pennant pattern is about to break – if we manage to break out on the upside, it’s good news. This is a bullish pennant pattern, so the likelihood of an upwards break out is high.
This is why I remain bullish for the immediate term – the next few days, but I’m also doing short term swing trading right now, this is not an investment strategy I’m talking about here. I have set up trailing stop orders to sell if the market drops by 3 or 4 % – these are low price swings, but it works for this kind of low volatility, so a 4% drop could be the start of a bigger correction, so it makes sense.

☝These are my opinions, not financial advice, always DYOR

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