Key Bitcoin takeaways
- Bitcoin bears sent the BTC/USD exchange rates lower at the beginning of this week.
- FOMC minutes to shed more light on US economic recovery.
- Earlier reports suggest that the Federal Reserve officials have agreed to begin taper talks.
YEREVAN (CoinChapter.com) — Bitcoin prices weakened on Monday. They dragged the BTC/USD exchange rates lower by 1.42% a day after global media asserted that the Federal Reserve officials had neared an agreement to start tapering their easy-money policies.
The benchmark cryptocurrency slipped to $46,347 compared to its sessional high above $48,000 established over the weekend. So it appears the correction appeared largely due to profit-taking behavior among daytraders. As a result, the modest move downside did not hurt Bitcoin’s interim bullish bias, especially as traders anticipated it to hit $50,000 in the coming session.
Nevertheless, the Monday price correction came when markets started factoring taper talks in their bias.
In detail, many Federal Reserve officials have agreed that they should scale back their $120 billion a month asset purchase program by mid-2022.
“I do expect we are going to be at the point where we’ve seen substantial further progress…probably later this year,”said Chicago Fed President Charles Evans in a digital roundtable with reporters last week.
Entering the current week, Fed will release the minutes of its Federal Open Market Committee (FOMC) meeting on Wednesday. Therefore, it would provide further details on when and at what pace it plans to unwind its $80 billion in Treasury securities and $40 billion in mortgage securities purchases.
That is soon to follow up with discussions on when to hike interest rates, which have been near-zero since March 2020.
Bitcoin prices recently surged from $29,000 to over $48,000 on euphoria surrounding the latest Ethereum network update. The cryptocurrency’s gains also appeared as the Fed chairman admitted in a press conference in July that inflation has run higher than they had anticipated.
But the Consumer Price Inflation report showed that month-over-month inflation declined from 0.9% in June to 0.5% in July. Thus, it gave teeth to the Fed’s “transitory” narrative, prompting Bitcoin to move sideways after reaching a three-month high of $48,716.
Bitcoin technical setup
The BTC/USD exchange rate anticipates modest downside corrections as its relative strength indicator treads near the overbought level threshold of 70. Meanwhile, the pair has just confirmed a Golden Cross formation between its 20-day and 50-day exponential moving averages, signaling traders’ intention to continue its recovery towards the next target of $50,000.
The Fibonacci retracement graph presents ideal support and resistance levels to watch in the wake of recent Bitcoin consolidation moves. The levels near $46,500 provide a price floor for bulls to target $50,000. Conversely, breaking below the same level exposes Bitcoin towards $42,500.