Bitcoin (BTC) orbited $30,000 on May 18 after fresh comments from the US Federal Reserve sparked volatility.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
Analyst: Additional Fed rate hikes ‘biggest risk’
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD consolidating within a range that has been in place since May 12.
The pair were thrown off course when Fed Chair Jerome Powell offered economic policy insights during the Wall Street Journal’s Future of Everything Festival.
“I don’t know if financial conditions have tightened more than this in a long time,” he said in an interview with the newspaper’s chief correspondent Nick Timiraos.
Powell appeared to confirm that the 50 basis point hike in interest rates would continue in later meetings of the Fed’s Federal Open Markets Committee (FOMC) and could reach “neutral” levels in the fourth quarter. However, rate hikes thereafter could continue if necessary to further tame inflation.
With traditional markets already pricing in such a scenario, overall volatility was limited as Powell avoided surprises.
BTC/USD saw a brief drop to $29,500 before recovering amid Powell’s words.
However, as risk assets brace for tough times as the financial tightening lingers, crypto market commentators have had little to say about wildly optimistic news.
“Hawkish memory. This is the biggest risk to markets,” macro analyst Alex Krueger responded in a series of Twitter posts on the potential for continued rate hikes over the next year:
“Every Fed official has a different view of what ‘neutral’ is. Estimates range from 2 to 3%. Futures markets are now priced in at 3.25% through December.”
According to CME Group’s FedWatch tool, markets expect the target price to be between 275 and 300 basis points at the December FOMC meeting.
Target rate expectations for December 2022 FOMC meeting. Source: CME Group
Next, $33,000 “makes sense.”
In the short term, some saw sustained relief for BTC.
Related: Fear & Greed Index Hits Lowest Since March 2020 Despite Bitcoin Price Hitting $30.5K
“Created a nice close above the $28.8k low as well as the $30k low that marked the first wick down in May 2021. The next HTF resistance is the $33,000 area. A test of this range makes sense in my opinion,” summarized popular trading account Daan Crypto Trades in its latest bitcoin-focused update.
Account colleague DonAlt, meanwhile, highlighted $34,500 as the key breaker for a more bullish perspective on BTC entry.
$BTC
That’s what I see, we’re reclaiming $34.5k and I think there’s good reason to be bullish towards at least $44k.
While we’re under $34.5k, bartending is allowed, above that less. pic.twitter.com/CzLY89rPAa
— DonAlt (@CryptoDonAlt) May 17, 2022
As Cointelegraph reported, a growing number of players are still favoring a return below the $23,800 lows recorded last week at the peak of the Terra LUNA and TerraUSD (UST) implosions.
“Bottoms take time to form so don’t expect them in the next day or two,” trader Crypto Tony told Twitter followers that day.
“Probably we will find support, bounce for some relief and catch late shorts and continue the trend.”
Still others think a pullback of $20,000 is unlikely.
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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