The Jackson Hole Effect? Powell’s speech sparks bitcoin fears amid similar price action in 2022

Bitcoin sign with a dynamite. 3D rendering

As Federal Reserve (Fed) Chairman Jerome Powell prepares to return to Jackson Hole this Friday, the Bitcoin (BTC) market is feeling a sense of anticipation due to the similarities in the current price action compared to the penultimate speech of the year.

Major moving averages have been tested and lost over the past two weeks, followed by a period of consolidation reminiscent of previous events.

However, it’s important to note that these similarities aren’t a guarantee of a repeat of the past, as market conditions and Powell’s stance have changed since then.

Ever seen the bitcoin market?

After According to Keith Alan, co-founder of analytics and crypto research firm Material Indicator, BTC price broke through crucial technical support levels last year in the two weeks leading up to Powell’s speech, set by the 21-day, 50-day, 100-day and line are represented. and 200 week moving averages (MA).

A period of consolidation followed, followed by a significant drop in prices in response to Powell’s aggressive tone during the speech. Alan explained:

Remember when Fed Chair Powell spoke in Jackson Hole last year and his hawkish tone triggered a 29% BTC plunge that took five months to recover?

It is worth noting that the recent price action in the bitcoin market bears similarities to last year’s pattern. For the past two weeks, Bitcoin has tested and lost the same key moving averages and is currently in a period of consolidation that mirrors events leading up to Powell’s previous speech.

Keith Alan points out that there have been notable changes since last year’s Jackson Hole event. Core inflation has eased and Powell’s communication approach has become more measured.

It’s uncertain whether Powell will adopt an aggressive or dovish stance in his upcoming speech, making it difficult to predict the market’s reaction with certainty. However, it is evident that the market is primed for a significant move.

Additionally, Alan points out that the formation of a lower price low increases the likelihood of an extension of the existing downtrend. Market participants should be prepared for the possibility of further tests of support levels.

As the bitcoin market awaits Powell’s speech, market sentiment remains dynamic. Traders and investors are anticipating potential market-moving signals from the event.

BTC price rally on the daily chart. Source: BTCUSDT on TradingView.com

As the date of Jerome Powell’s return to Jackson Hole draws closer, Bitcoin has posted a notable recovery of 2.1% over the past 24 hours, which is a positive bullish move that is taking it closer to the $27,000 mark.

However, it is important to note that if the outcome of Jerome Powell’s speech on Friday proves favorable for crypto investors, the cryptocurrency may face a significant obstacle in the form of its 200-day moving average of $27,200 pushes the price of bitcoin to higher levels.

Selected image from iStock, chart from TradingView.com

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