The price of Bitcoin continues to slowly fall, with other major digital assets following suit. The market moves along with the old financial sector and charges a higher final rate for 2023.
At the time of writing, Bitcoin is trading at USD 16,600 with sideways movement in the past 24 hours. In the previous week, the cryptocurrency registered a 3% loss. Past outperformers such as Dogecoin, Polygon, and Ethereum are seeing heavy losses on similar time frames.
Bitcoin likely to bounce back in the coming days?
The number one crypto is trending down after US Federal Reserve (Fed) Chairman Jerome Powell spoke about the current macroeconomic conditions. Speaking at last week’s Federal Open Market Committee, the Fed chairman emphasized his goal of continuing to fight inflation.
This decision may lead to lower interest rates in the short term, but the Fed is aiming for a higher final interest rate, the rate at which the institution will ultimately operate, in the long term. The market is responding to this new reality.
According to several reports, market parties expected a final rate of around 5%, which rose to 5.5%. Interest rates can stay this high until 2024. Several Fed representatives repeated the same aggressive message. New York Fed President John Williams said:
(…) we will have to do what it takes” to get inflation back to the Fed’s target of 2%… (final or peak interest rate) could be higher than what we wrote down.
When the Fed gave its message, Bitcoin saw a clear rejection of the 50-day Simple Moving Average (SMA). If the cryptocurrency can break through this level, it could begin to shift the bearish trend and regain previously lost ground.
BTC is struggling with the loss of bullish momentum and appears to be at risk of returning to its yearly lows. Bulls need to hold the line at around $16,200 to $16,500 to avoid further downturns.
Data from Material Indicators points to a spike in volatility for the week ahead. The US will publish its labor market data on Thursday. If this country’s economy remains strong, the Fed will get the support it needs to keep raising interest rates.
Therefore, vital economic data will continue to be a bearish indicator for Bitcoin and traditional stocks. Conversely, material indicators register a long signal on their trend forecast indicator. This signal could point to a near-term BTC price recovery.
2/6 On the 2Day & 3Day TFs, the predictive A1 Slope Line indicates that bullish momentum is still #BTC to Tuesday, but it starts fading mid-week.
Keep in mind that the A1 slope line is a real-time indicator, so it can and will change if a shift in momentum is detected. pic.twitter.com/GaEEKf2U2A
— Material Indicators (@MI_Algos) December 19, 2022
Does this indicator point to favorable volatility for bulls after the upcoming unemployment report? Remains to be seen.