- Fed hiked interest rates by 0.75% on Jun 15, its highest since 1994.
- Bitcoin bounced reacting to the news, but couldn't sustain the rally.
NEW DELHI (CoinChapter.com) — Bitcoin (BTC) prices surged upwards towards the end of the trading day on Jun 15, after the U.S. Federal Reserve hiked interest rates by 75 basis points (0.75%) on Wednesday.
The rate increase is the Fed’s most aggressive hike since 1994, raising the Federal Open Market Committee’s (FOMC) benchmark funds rate to a range of 1.5%-1.75%. Members of the Fed committee expect the rates to reach 3.4% by the end of the year.
Member expectations put the rate at 1.5 percentage points above the Mar estimates. The committee expects the rates to rise to 3.8% in 2023. Moreover, officials cut their outlook for 2022 economic growth significantly, anticipating a 1.7% gain in GDP, down 1.1% from Mar’s projections of 2.8%.
Additionally, the U.S. central bank announced it would continue reducing the size of its balance sheet at the rate announced in May. Fed chair Jerome Powell noted that the “labor market is extremely tight, and inflation is much too high.“
We want to see progress. Inflation can’t go down until it flattens out. If we don’t see progress … that could cause us to react. Soon enough, we will be seeing some progress.Jerome Powell noted
As news of the rate hike spread, analysts began sharing projections on when the Fed would start cutting rates. The consensus amongst the Twitterati was that rate cuts would not begin before 2024.
Bitcoin Prices Rise… And Then Fall
Although BTC prices briefly rose to $22,805 on Wednesday, the prime crypto spiraled downwards as trading began on Jun 16. Despite the long lower tails on the previous two days’ candles, which indicate strong buying action from bulls, bears seem to have the upper hand on Thursday.
BTC prices fell 9.2% between intraday high ($22,957) and low ($20,845) levels. Moreover, negative bars on the MACD histogram indicate the MACD line (difference of 12-day and 26-day EMA) is moving away from the MACD signal line (9-day EMA of MACD).
As such, the momentum oscillator MACD seems to be forecasting a strengthening downward momentum for BTC prices. If BTC continues to downtrend, Bitcoin prices might fall to test support near $20,300.
Failure of immediate support level might cause BTC prices to fall to support near $18,500, which previously supported Bitcoin prices between Nov 30, 2020, and Dec 14, 2020. Finally, a marketwide sell-off could force Bitcoin to fall to support near $16,500, a fall of nearly 22% from current price levels.
Meanwhile, BTC’s relative strength index is currently at oversold levels, with a value of 23.46 on the daily charts. The RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. An oversold RSI indicates a bullish trend reversal is on the cards.
If traders begin buying the token based on oversold RSI levels, BTC prices might rise to challenge resistance near $22,400. A break above immediate resistance might give Bitcoin the impetus to challenge resistance near $24,500, resulting in more than 16% gains from current price levels.
Finally, BTC would need to jump more than 30% to target resistance from its 20-day exponential moving average (20-day EMA, red wave) near $27,450.
At writing, BTC was trading at $20,949, down 7.14% on the day.