December 8, 2022


Bitcoin (BTC) retreated and reversed its daily gains after the Federal Reserve announced its third consecutive interest rate hike of 75 basis points (bps) on September 21.

Merchants sold the news

BTC price is down about 6.5% from the intraday high of $19,950, Hit $18,660 minutes after the FOMC statement. Its decline reflected a similar abrupt correction in the US stock market, with the S&P 500 down 0.5% minutes after the Fed’s update.

BTC/USD daily price chart. Source: TradingView

On the other hand, the 10-year US Treasury yield rose to 3.6% after the Federal Reserve’s announcement versus 3.56% five minutes before it. Similarly, the yield on the two-year Treasury rose from 3.98% to 4% in the same time frame.

The US Dollar Index (DXY), which measures the dollar’s strength against a basket of major foreign currencies, rose to 111.57 for the first time in 20 years.

The Fed also published an updated “point chart,” which aligns with its officials’ individual interest rate projections by the end of 2025. These projections point to additional rate increases going forward, with the 2022 target reaching 4.4% and the 2023 target at 4.6%. .

Central bank officials also predicted that the interest rate would peak at 4.6% in 2023. After that, it would drop to 3.9% in 2024, followed by another drop to 2.9% in 2025.

All metrics point to more pain for Bitcoin

The rise of the dollar and the decline of Bitcoin after the update of the Federal Reserve, the opposite of investors Increased appetite for cash and cash-based instruments compared to riskier assets. Meanwhile, the central bank’s dot chart hinted that investor sentiment would remain unchanged until the end of 2023.

RELATED: Bitcoin ‘Nuclear’ Warning As Fed Rate Raise Approaches – Dollar Index Reaches 20-Year High

Bitcoin price could continue to suffer due to the Fed’s hawkish stance and its attempts to bring down inflation from the current 8.3% level. After the central bank modernization, many analysts pointed That the price of bitcoin could break below the current technical support range of between $18,000 and $20,000, given that the Federal Reserve may raise interest rates by another 75 basis points before the end of the year.

The technical outlook for Bitcoin looked similarly bearish. Notably, the cryptocurrency was forming a bearish reversal pattern dubbed “Head and Shoulders.”,” which has a profit target of approximately $14,000, as shown below.

BTC/USD daily price chart. Source: TradingView

On the contrary, a rebound from the head and shoulders support level at $18,800 could make Bitcoin look towards $22,500 as a temporary bullish target.