Bitcoin price drops after the Fed raised interest rates early due to inflation concerns

After the Fed pushed forward its plan to raise interest rates twice in 2023, Bitcoin fell to close to key support levels, and the Dow Jones and S&P 500 indexes fell.

Bitcoin (Bitcoin) Shortly after Fed Chairman Jerome Powell announced that the Fed would advance its timetable and arrange for two interest rate hikes in 2023, prices expanded their decline.

After falling below the $40,000 level and hitting an intraday low of $38,300, the price of Bitcoin has weakened in the early trading hours. The Dow Jones and S&P 500 indexes also fell 0.77% and 0.54%, respectively.

Daily cryptocurrency market performance. source: Coin 360

When this decision was made, economists were worried about rising inflation in the United States. Powell said that the Fed had raised its inflation forecast from 2.4% to 3.4%. Although Powell described the current surge in inflation as “temporary”, consumer prices are at a 13-year high, and analysts worry that rising inflation will affect the economic recovery after the epidemic.

Powell did not directly state whether or when the Fed will begin to reduce its monthly bond purchases of $120 billion, but the decision to start raising interest rates in 2023 indicates that the plan will be significantly reduced before 2023 in order to proceed in a mild situation. fashion.

Can the Bitcoin price maintain its current range?

BTC/USDT daily chart. source: Transaction view

On June 15, Bitcoin price successfully completed a bullish reverse head and shoulders pattern (4-hour chart), but failed to reach the target of $45,500 after hitting the resistance level of $41,350.

Although the price has fallen below $40,000 and failed to flip the level to support, analysts believe that the current price movement is nothing more than a range trading. At the time of writing, $38,300 looks like a lower support level to retest .

Less than 3 hours before the daily close, traders may seek BTC to stay above the 20-day moving average near $37,000, which is expected to play a supporting role.

One thing to note is that BTC has steadily flowed into major exchanges in the past few days, and the outflow of miners has increased because data from CryptoQuant indicates that the inflow of bitcoin has led to bearish results.

The 50-day and 200-day moving averages are also about to converge and may form a bearish “death cross”, but both are lagging indicators, which means that they do not fully reflect the spot price trend. Nevertheless, both moving averages may bring considerable resistance to the bulls.

Below the range of $37,000 to $36,000, many traders on Crypto Twitter announced that they have bid, which may bring the BTC price to the lower end of the current range in the $35,000 to $31,000 area.