Bitcoin price retests key support as fears of Fed rate hike steal $27,000

Bitcoin (BTC) traded back below USD 27,000 on May 19 as analysis showed large trading volumes were depressing the price.

The specter of inflation haunts crypto markets

Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD reached lows of $26,380 on Bitstamp.

A modest recovery then took the pair to ranges known from several days prior, still in focus ahead of Wall Street’s final open this week.

The downside came overnight on rising market expectations of a rate hike by the United States Federal Reserve in June.

These were thanks to low jobless claims for the week, with Fed officials adding an aggressive tone.

“On the one hand, inflation is too high and we haven’t made enough progress in reducing it yet,” said board member Philip Jefferson at the 2023 International Insurance Forum in Washington, DC.

“On the other hand, GDP has slowed significantly this year, and while the effect on the labor market has been limited so far, demand is clearly beginning to feel the effects of interest rates rising 5 percentage points over a little over a year. past.”

According to the CME Group’s FedWatch Tool, the odds of the Fed interrupting the walking cycle next month were over 95% at one point, down from just 62% on that day.

In a detailed look at the events, the monitoring sources Material Indicators showed bid and ask liquidity owners placing trades to manipulate BTC price behavior on short time frames.

“After chopping sideways, markets began pricing in the potential for another rate hike as the morning’s Jobless Report and #FED speakers set the tone for that conversation ahead of #JPow’s appearance, scheduled for Friday,” share of Twitter comment In summary.

“As the price started to fall, a ladder of bids was robust and the price moved to previous support ~$26.5k, but a sell wall was quickly put in place to suppress the price.”

Material indicators noted that BTC/USD has retested its 100-day moving average (MA) — its third in the past seven days.

“After about 90 minutes and a few bites at the sales wall, the roof was pulled. Shortly after, a new $36 million bid block was placed under local support and meltdown began,” it added.

In addition to the 100-day MA, the 200-week MA of $26,100, the analysis concluded, could also form a downside support zone after this.

Material indicators pointed to Fed Chairman Jerome Powell’s May 19 appearance, implying that further aggressive talk about inflation would add to pressure on the price of risk assets.

Traders in wait and see mode

Traders thus maintained potential bearish targets, which focused on a broad area around $25,000.

Related: Hyperbitcoinization is coming, Bitcoin OG says as ‘wholecoiners’ hit 1 million

Michaël van de Poppe, founder and CEO of trading firm Eight, was one of them, identifying $27,000 as the key support level now missing from the chart.

Wanted #Bitcoin to hold more than $27,000-27,200.

Didn’t happen, stopped on my lungs and is now in the waiting game.

Win that range back, we try again, or now we wait for $26,400 sweep and/or $25,000.

— Michael van de Poppe (@CryptoMichNL) May 18, 2023

“I’m looking for a long if we can break above $27,500, or a short if we close below $26,600. No trading between this tight range,” popular trader Crypto Tony added in a section of Twitter comments .

Trading suite Decentrader, meanwhile, signaled uninspiring numbers when it came to shorts versus longs, arguing that a shift was needed to give the price a chance to reclaim higher levels.

“Long/Short ratio is currently above 2, which is very high. This usually needs to be resolved and lowered before things look bullish,” he said. recognized.

Magazine: ‘Moral Responsibility’: Can Blockchain Really Improve Trust in AI?

This article does not contain any investment advice or recommendations. Every investment and trading move involves risk and readers should do their own research when making a decision.