Bitcoin price drifted upwards this week after the Federal Reserve delivered a mixed interest rate decision on Wednesday.
Bitcoin (BTC) recovered to a high of $87,375, its highest level since March 7, and up by 13% from its lowest level this month.
The rebound coincided with the ongoing recovery of other assets like stocks and commodities. U.S. equities rose after the FOMC decision, with the Dow Jones and S&P 500 rising by over 1%. Gold jumped to a record high of $3,100, while copper crossed the $10,000 milestone.
The rally was likely driven by Jerome Powell’s prediction that Donald Trump’s tariffs would lead to transitory inflation. Such a scenario would suggest more Fed rate cuts than the market expected. This explains why the rate-sensitive 10-year bond yields dropped after the rate decision.
However, these assets pared back some of their gains, with Dow Jones futures falling by 200 points and those tied to the Nasdaq 100 index dropping by 145 points.
Technicals point to further Bitcoin price decline
Chart patterns suggest that Bitcoin’s price may continue falling in the coming days. The daily chart shows that the coin is slowly forming a rising wedge pattern, which is a popular bearish signal. This pattern consists of two rising and converging trendlines, with a bearish breakout likely when the two lines converge.
Bitcoin has also formed other bearish patterns. It recently formed a death cross pattern as the 50-day and 200-day Weighted Moving Averages crossed each other. A wedge pattern is considered a highly bearish formation in technical analysis.
Before that, BTC price formed a double-top pattern at $108,233. This pattern had a neckline at $89,000, which Bitcoin is now attempting to retest. A break-and-retest is a popular bearish continuation signal.
Therefore, the coin’s outlook is bearish, with the initial target being $76,750, its lowest level this month. A drop below that level would point to more downside, potentially to $74,070, its highest swing in March last year. This target is about 14% below the current level. A drop to last March’s high would be a bullish signal since it would represent a successful break-and-retest.
Read the full article here