Bitcoin plunges to $22,000 as hawkish comments from Powell weaken financial markets
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(Kitco News) – The downward pressure that the crypto market has faced in recent days was magnified on Tuesday after Federal Reserve Chairman Jerome Powell signaled that the central bank will indeed need to raise interest rates higher and longer as it struggles to tackle stubborn inflation.
While this announcement from Powell was not entirely unexpected, financial markets came under pressure after the comments, with crypto prices flogging to slightly lower prices while stocks plunged without a rebound. At the end of the US markets, the S&P, Dow and Nasdaq were well in the red, down 1.53%, 1.72% and 1.25% respectively.
Data from TradingView shows that Bitcoin (BTC) briefly dipped to $22,000 after Powell’s testimony, but quickly bounced back above $22,400 before continuing to slowly decline for the rest of the day, trading back near support at $22,000 at the time of writing.
BTC/USD 4-hour chart. Source: TradingView
Before Powell’s comments, March bitcoin futures prices were up slightly in early trading, according to Kitco senior technical analyst Jim Wyckoff, but that all changed in the afternoon when the futures price fell to $20,020.
“Bulls have lost their overall technical advantage in the short term as a new price downtrend is now in place on the daily bar chart and the bears have some momentum,” Wyckoff said.
A higher low or the start of a downtrend?
According to the latest Technical Roundup newsletter, Bitcoin has continued to pull back from monthly resistance found at $23,300, and the main zone of support is between $19,400 and $20,500.
BTC/USD 1-month chart. Source: Technical Roundup
The current debate among analysts now centers on “whether the current pullback could simply be a higher low before another higher high,” the newsletter said.
“Our view is that, conservatively, the case for this being a higher low becomes viable above the highest daily resistance ie $23,700. More aggressively, the argument can be made above the lower limit of $22,600.”
BTC/USD 1-Day Chart. Source: Technical Roundup
Technical Roundup’s interpretation of the current market structure is based on two factors: the choppiness experienced in this area and the fact that the more well-defined support levels are closer to $20,000. to expect a clean market structure pattern,” the analysts said.
“In the absence of clear high timeframe support levels, the daily timeframe and lower timeframe price action must be particularly compelling for us to develop strong views,” they wrote. “This range has been anything but. We are aware that the market is pulling back from resistance on multiple time frames, so we need good levels and/or good price action to go ahead of that. Currently, in our view, we have neither.”
Altcoins’ downtrend deepens
A significant majority of altcoins were down after the hawkish comments from Powell, with only a handful of tokens in the green in late afternoon trading.
Daily performance in the cryptocurrency market. Source: Coin360
Everscale (EVER), OrgainTrail (TRAC), and Mask Network (MASK) led the top 200 in gains for the day with gains of 8.39%, 8.04%, and 5.84%, respectively.
The total cryptocurrency market cap is now at $1.009 trillion, and Bitcoin’s dominance rate is 42.2%.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
