Bitcoin (BTC) breaks above $20,000, is it time to buy?

The Fed raised the interest rate yesterday by 50 points. In response to this announcement, stocks and cryptos were immediately in the red. Crypto leader bitcoin (BTC) drops 3% after the announcement. Could this downward impulse initiate a new bear market? Check out this analysis.

Bitcoin drops 4.3%.

The crypto leader reacted positively to the CPI on Tuesday. Sure enough, bitcoin gained over 6% in value after the release, surging toward $18,000. The consumer price index is 7.1% for this month, 0.2% lower than the forecast of 7.3%. This was also down 0.6% from October’s 7.7%. The crypto market has taken this drop in inflation well. In effect, this means that the Fed is becoming less and less aggressive in its monetary policy. Rising interest rates throughout the year slowed inflation. Therefore, maintaining or lowering this rate, by the Fed, will have to further increase the price of bitcoin.

Fed Raises Interest Rate, Bitcoin Falls
Fed Raises Interest Rate, Bitcoin Falls – BTC/USD in H1 – TradingView

However, the Fed raised the interest rate by 50 points yesterday. This decision was taken in order to fight against high inflation. This could indicate that despite a slight drop in inflation, the US central bank will continue to be aggressive next year. After hovering around $18,200, Bitcoin immediately suffered a 3.3% drop after the Fed announcement. Until now, this first crypto by market capitalization is still under the bearish pressure. Indeed, it suffered a 1% decline earlier today, and it is currently trading around $17,500.

The bear market could continue

The bullish impulse from the CPI has allowed bitcoin to approach a critical hurdle. This is the area near $18,500. Described in our previous analysis, this resistance could lead the price into a new bear market. This area is indeed close to the 50% level of the Fibonacci retracement. But not only that, it also aligns with a former critical support. Moreover, bitcoin immediately fell after touching this zone, following the increase in the interest rate. This demonstrates the relevance of this level. Thus, one could envision the Bitcoin price descending below $15,000.

$18,500 resistance could lead Bitcoin into a new bear market
$18,500 resistance could lead Bitcoin into a new bear marketBTC/USD in D1 – TradingView

If the price breaks through this hurdle, the next key resistance is found at $20,000. The breakout of this psychological level will mean that the market is ready for a bull-run.

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