Bitcoin (BTC) analysts were keen to set new price targets on Aug. 27 after the largest cryptocurrency briefly slipped below $20,000.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
The price targets below $20,000 BTC remain in place
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hit $19,945 on the night following aggressive comments from the Federal Reserve on Bitstamp.
Intraday losses for the pair approached 9% and US stocks plunged on the outlook for inflationary policies that appear to be increasingly abandoning the ‘soft landing’ narrative.
“Restoring price stability will take time and will require vigorous use of our tools to better balance demand and supply. Reducing inflation will likely require a sustained period of below-trend growth,” Fed Chair Jerome Powell said in a speech at the annual Jackson Hole Economic Symposium.
“In addition, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth and weaker labor market conditions lower inflation, they will also cause some pain to households and businesses. These are the unfortunate costs of reducing inflation. But failure to restore price stability would mean far greater pain.”
Powell added that quantitative tightening, known as QT, could last “for some time,” sparking a large spike in volatility on the downside in risky assets.
I just wasted 10 minutes of my life watching Powell say a bunch of nothing
— Will Clemente (@WClementeIII) August 26, 2022
As Cointelegraph reported, U.S. stocks lost a total of $1.25 trillion in a single session — more than the entire crypto market cap.
Bitcoin regained $20,000 on the day and is hovering near $20,200 at the time of writing, still close to a one-month low.
For traders, it was now a bounce followed by – possibly – even heavier losses.
“$BTC fell lower than expected but the idea is still the same. First up to liquidate late shorts, then down,” popular crypto Twitter account Il Capo told followers in the first of several updates that day.
Crypto’s Il Capo continued to paint near-term relief targets between $23,000 and $23,500, but on the downside, $19,000 and $16,000 were now in play.
$BTC main idea
Resistances: 22500 and 23000. For a short push, expect a bounce to either of these levels. This would also trap longs again as it would be an aggressive move.
Support: $19,000. Break down here and it’s straight to new lows.
Main goal: $16,000 pic.twitter.com/wFbVvBmHYO
— il Capo Of Crypto (@CryptoCapo_) August 27, 2022
Others saw the potential for increasing BTC accumulation should the $20,000 support be breached again.
Account peer TraderSZ viewed $19,400 as a potential jump zone under such a correction, with relief stretching to the weekly open near $23,000 before $17,600 came back into the picture in June.
Meanwhile, key trend lines seen in previous bull markets are now overhead again for BTC/USD. These included the realized price at $21,600 and the 200-week moving average (MA) at almost $23,000.
“Higher resistance at $21,100. Support at $19,850 followed by $19,200,” added trading suite Decentrader in part of a current scenario summary.
DXY wakes up to last minute hints from Fed
Meanwhile, as stocks fell, the familiar face of the US dollar returned to haunt the crypto markets.
Related: CME bitcoin futures hit record discount amid ‘very bearish sentiment’
The US Dollar Index (DXY), which initially saw strong downside, rallied to levels that took it back into a notable range of 20-year highs.
At the end of August 26, the DXY was just below 108.9 and rose from a low of 107.6 in a matter of hours.
US Dollar Index (DXY) 1 hour candlestick chart. Source: TradingView
“The FED stays on course, meaning $DXY is maintaining its trend, which means assets are trending lower,” summarized analyst Kevin Svenson.
Investor and entrepreneur Danny Baldus-Strauss, meanwhile, alerted Twitter followers to the inverse correlation between DXY and BTC as a continuous top and bottom indicator.
“As you accumulate bitcoin in this bear, keep an eye on $DXY. All major lows in $BTC have coincided with local highs in $DXY,” he noted alongside a chart from trading platform Stockmoney Lizards.
US Dollar Index (DXY) vs. BTC/USD annotated chart. Source: Danny Baldus-Strauss/ Twitter
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
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