YEREVAN (CoinChapter.com) — Bitcoin (BTC) came closer to crashing below $60,000 — a level it holds dear to validate its $100,000 price target by the end of this year — on the day the Federal Reserve announced its intention to unwind its COVID-19 stimulus package completely by June 2022.
The U.S. central bank said Wednesday that it would begin scaling back its $120 billion a month asset purchase program this month due to persistently higher price pressures post the U.S. economy’s reopening. The move appeared in sync with other central banks worldwide, including the Bank of Canada and the Reserve Bank of Australi, that started tightening their monetary policies.
Bitcoin, which rallied from under $4,000 in March 2020 to as high as $67,000 last week against the quantitative easing policies, dropped to near $60,000 following the Fed’s update. Nonetheless, the flagship cryptocurrency recovered a big portion of those losses as traders bought the dip, with it closing near $63,000.
Many traders and investors flocked to Bitcoin and related crypto assets while seeking a hedge against inflation caused by the Fed’s purchasing of $80 billion worth of government bonds and $40 billion worth of mortgage-backed securities, coupled with near-zero interest rates that made lending cheaper and added excessive U.S. dollar liquidity to the market.
The easing policy pushed the yields on short-term government bonds and the U.S. dollar index lower, prompting investors to seek better profits from non-yielding assets, the riskier instruments like stocks and Bitcoin.
Nonetheless, inflation now runs at its three-decade high of 5.4%, according to the Labor Department’s Consumer Price Index (CPI) readings from September 2021. As a result, even Fed’s tapering plans have not deterred Bitcoin from pursuing fresh price highs.
That is mainly because the central bank intended to unwind its asset purchasing month by month while keeping interest rates near zero. However, after its two-day policy meeting, the Federal Open Market Committee (FOMC) also said it would prepare itself to adjust “the pace of tapering if warranted by changes in the economic outlook.”
In a conference later, Fed’s chairman Jerome Powell said they would be prepared to “speed up or slow down” their tapering as needed.
The $100K Bitcoin target
Bitcoin’s rebound from $60,000-support Wednesday confirms the level as a strong accumulation zone. That also raises the cryptocurrency’s potential to hit $100,000 by the end of this year, as propagated by many analysts in the past.
But the BTC price still risks correction towards $50,000 before pursuing a strong push towards $100,000. In detail, its ongoing pullback originated from a rising trendline resistance that constitutes an Ascending Channel pattern. Hence, its downside target lies near $50,000.
Meanwhile, Oliver Renick, the lead anchor at TDA Network, spotted an early upside boom for Bitcoin towards $100,00, citing the Bull Pennant pattern provided in the chart above.
“Possible pennant/flag in #bitcoin? Regardless, here’s where I see the Do-Or-Die prices: $65k — juicy whole number & previous high. Easy call. Get past there again, $100k promise land cometh.”