Bitcoin Bulls Stumble at $23.4K as Fed ‘Disinflation’ Sparks BTC Price Rally
Bitcoin (BTC) returned to key resistance on February 8 as crypto markets received a boost from a familiar source.
Powell: “Disinflation Process” is here
Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD reached the important $23,400 zone on Bitstamp overnight.
The pair reacted positively to the latest comments from the US Federal Reserve, which also sent shares higher during the February 7 trading session on Wall Street.
Fed Chairman Jerome Powell again mentioned “disinflation” during his appearance, reinforcing market hopes that interest rate hikes could cool more quickly in line with inflation. These stemmed from the last Federal Open Market Committee (FOMC) meeting on February 1, where the Fed raised interest rates by 0.25%.
“The message that we sent at the FOMC meeting last Wednesday was really that that disinflation process — the process of bringing inflation down — has begun, and it’s begun in the goods sector, which makes up about a quarter of our economy,” he said at The Economic Club of Washington, DC
Powell nevertheless warned that there was “a long way to go” and that the US was in “the very early stages of disinflation”.
Despite this, risk assets rose to Wall Street, with the S&P 500 and Nasdaq Composite Index ending up 1.3% and 1.9% respectively.
Bitcoin also erased earlier weakness, having dipped below $22,700 earlier in the week, but bulls proved unable to handle the ask liquidity at $23,400 and beyond.
This liquidity remained in place on the day, as visible in data covering the Binance order book included of on-chain monitoring resource Material Indicators.
“Markets tumbled towards the end yesterday, with Bitcoin’s latest H4 candle showing weakness at resistance and pushing a shooting star,” popular trader Mark Cullen in summary about recent events.
“Personally, I’m still waiting for the lows to be swept. BUT if BTC can close a H$ above 23.4k I’ll look for a push higher.”
Michaël van de Poppe, founder and CEO of trading company Eight, was also encouraged by Bitcoin’s reaction. A reversal of $23,300 to more solid support, he told Twitter followers on the day, would mean the latest BTC price correction “is over.”
BTC/USD was trading around $23,200 at the time of writing, with traders still counting down to the return of volatility.
Golden Cross vs. death cross to be resolved within a few days
Looking ahead, the rest of the week held little in the way of important macroeconomic signals for the crypto markets.
Related: Bitcoin Takes ‘Lion’s Share’ As Institutional Inflows Hit 7-Month High
As Cointelegraph reported, eyes were already on next week’s inflation data, which came in the form of the Consumer Price Index (CPI) for January.
At the same time, chart analysts were hoping for a positive outcome from Bitcoin’s latest “golden cross” on the daily chart – the first since September 2021. At the same time, however, weekly timeframes for BTC/USD continued to print a “death cross,” a phenomenon that often preceded further downside earlier.
“Many say Death Cross/Golden Cross Lagging Indicator. It’s Lagging for those who just think Golden Cross means Bullish and Death Cross means Bearish. I use this indicator to understand Momentum,” fellow trader Jibon wrote in part of a dedicated Twitter thread on the topic of 7 Feb.
Jibon compared the current setup with previous cases in 2015 and 2019 and added that it would take a “few days” for the impact of the crosses to become more apparent.
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