Home Bitcoin NewsBitCoin Forex Bitcoin Heads to $20,000 Ahead of FOMC

Bitcoin Heads to $20,000 Ahead of FOMC

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By failing to move above the resistance at 30,000 this month, it seems like bears have prevailed.

Bearish View

  • Set a sell-stop at 24,915 and a take-profit at 23,000.
  • Add a stop-loss at 26,000.
  • Timeline: 1 day.

Bullish View

  • Set a buy-stop at 25,500 and a take-profit at 27,000.
  • Add a stop-loss at 24,000.

The BTC/USD price crashed to the year-to-date low as investors remained concerned about the rising inflation, interest rates, and recession chances. It dropped to a low of 24,915, which was the lowest level since 2021.

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Bitcoin Remains Under Pressure

Bitcoin and stocks are struggling after the strong American inflation data signaled that a major recession could happen in the coming months.

American stocks declined sharply on Friday, with the Dow Jones falling by over 800 points and the Nasdaq 100 shedding over 400 points.

At the same time, the bond sell-off continued after the consumer price index data. The yield of the 10-year bond rose to 3.16% while that of the 30-year rose to 3.20%. Bond yields are usually inverse to their prices.

This performance is mostly because of the changing market conditions as inflation surges and the unemployment rate remains low.

Therefore, analysts believe that the Federal Reserve will embrace a more hawkish tone when it completes its meeting this week. It will likely hike rates by 0.50% and hint towards more hikes later this year. It is also continuing with its quantitative tightening policy.

Still, there are lingering concerns about a recession considering that the yield curve inverted a few months ago. In a statement during the weekend, Larry Summers, who warned about inflation said:

“When inflation is as high as it is right now and unemployment is as low as it is right now, it’s almost always followed within two years by recession. The Fed’s forecasts have tended to be much too optimistic there, and I hope they’ll realize fully the gravity of the problem.”

The BTC/USD pair will react to the upcoming interest rate decision by the Fed. Also, with the Consensus event done, enthusiasm about crypto could be a bit limited.

BTC/USD Forecast

The BTC/USD pair made a bearish breakout during the weekend. It managed to move below the important support level at 25,480, which was its lowest level this year. The pair has moved below the 25-period and 15-period moving averages. It also seems like it has formed a head and shoulders pattern.

Therefore, by failing to move above the resistance at 30,000 this month, it seems like bears have prevailed. As a result, a drop to the 2017 high of 19,815 cannot be ruled out. In the near term, the next psychological level to watch will be at 23,000.

BTC/USD

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