Bitcoin crashes to $22,000 as hawkish comments from Powell send financial markets into turmoil

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(Kitco News) – The downward pressure the crypto market has been facing over the past few days was amplified on Tuesday after Federal Reserve Chair Jerome Powell signaled that the central bank must indeed hike interest rates higher and for longer as it difficulties in getting a grip on persistent inflation.

While this announcement from Powell wasn’t entirely unexpected, financial markets took a hit following the comments, with crypto prices plunging to slightly lower prices while stocks plummeted without a recovery. At the close in the US, the S&P, Dow and Nasdaq were down 1.53%, 1.72% and 1.25% respectively.

Data from TradingView shows that Bitcoin (BTC) briefly dipped to $22,000 according to Powell, but quickly bounced back above $22,400 before slowly drifting lower for the rest of the day, trading back near the $22,000 support at the time of writing .

BTC/USD 4 hour chart. Source: TradingView

Prior to Powell’s comments, March bitcoin futures prices were up slightly in early trade according to Kitco senior technical analyst Jim Wyckoff, but that changed in the afternoon when the futures price fell to $20,020.

“Bulls have lost their overall short-term technical advantage as there is now an incipient price downtrend on the daily bar chart and bears have some momentum,” Wyckoff said.

A higher low or the start of a downtrend?

According to the latest Technical Roundup newsletter, Bitcoin has retreated further from the monthly resistance at $23,300 and the main support zone is between $19,400 and $20,500.

BTC/USD 1 month chart. Source: Technical Summary

The current debate among analysts now revolves around “whether the current pullback could simply be a higher low before another higher high,” according to the newsletter.

“Conservative in our view is that the case for this being a higher low is viable above the highest daily resistance i.e. $23700. More aggressively, the argument can be made above the $22600 floor.”

BTC/USD 1 day chart. Source: Technical Summary

Technical Roundup’s interpretation of the current market structure is based on two factors: the volatility in this area and the fact that the better defined support levels are closer to $20,000. “None of the range breakouts have continued in any direction and as such it may be premature to expect a clean market structure pattern,” the analysts said.

“In the absence of clear support levels for high timeframes, the daily timeframe and price action on the lower timeframes need to be particularly compelling for us to develop strong views,” they wrote. “This series was anything but. We are aware that the market is retreating from multi-time-frame resistance, so we need good levels and/or good price action to step in front of it. From our point of view, we don’t have either at the moment.”

Altcoin downtrend is deepening

A clear majority of altcoins trended lower following Powell’s aggressive comments, with only a handful of tokens in the green as of late afternoon.

Daily performance of the cryptocurrency market. Source: Coin360

Everscale (EVER), OrgainTrail (TRAC), and Mask Network (MASK) led the top 200 daily gains with gains of 8.39%, 8.04%, and 5.84%, respectively.

The total cryptocurrency market cap is now $1.009 trillion and Bitcoin’s dominance rate is 42.2%.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.

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