Bitcoin nears $29,000 as Fed rate hike brings clarity to market
As of the first quarter of 2023, Bitcoin (BTC) has shown impressive performance as one of the best assets. The cryptocurrency is currently on track to surpass the $29,000 level, with market uncertainty easing following the Federal Reserve’s (Fed) interest rate hike.
Bitcoin sets its sights on the next major milestone of $30,000. Breaking through the $28,600 resistance level could pave the way for further gains and allow Bitcoin to reach levels lost during the 2022 crypto winter.
Will Bitcoin have enough fuel to break higher levels?
Bitcoin’s price has held the $27,000 support well, indicating intense buying pressure at that level. However, according to a recent mail by trader and analyst Rekt Capital on Twitter, the price is struggling to break through the higher high trendline resistance, as shown in the chart below, preventing it from reaching new highs.
The analyst suggests that breaking through the $28,500 price point will be a critical bullish trigger, indicating solid buying momentum from the bulls and potentially paving the way for further price increases.
If Bitcoin were to lose the $27,000 support level, it would signal a bearish trend. Nevertheless, Bitcoin was able to bounce back ahead of the Federal Open Market Committee (FOMC) announcement, recovering from the $26,600 level. This recovery should be a significant support level for any future decline in Bitcoin’s price, along with the $25,200 floor.
Assume further that Bitcoin continues to struggle to make new highs. If so, it could be a sign that the market needs a pullback to gather strength before moving higher, like the pullback and further short squeeze that occurred in February, falling from the $25,000 resistance.
A drop in Bitcoin’s price could be a healthy development for the most significant crypto in the industry, as it would allow the market to reset and potentially create a stronger foundation for the next leg up.
What is the potential retracement for BTC in the event of a pullback?
According to a recent blog post by analyst Justin Bennet, Bitcoin has already tested the macro resistance level during Wednesday’s FOMC volatility period, which is placed at $28,900.
Bennet suggests that “liquidation clusters,” which refer to a concentration of investors who are forced to sell their positions due to margin calls or liquidation events, can often serve as a magnet for Bitcoin.
According to Bennet, there are more long liquidations below today’s level than short liquidations above $29,000. This suggests that there may be more selling pressure in the market, which may lead to further price declines.
In a bearish scenario for the most prominent cryptocurrency in the market, $25,200 will serve as a critical trench for bulls, along with the 200-day moving average, if they want to keep control of the current trend in the market. On the other hand, Bitcoin has held well in the $26,000 zone, which could serve as a minor pullback to retest the macro resistance level and reach the $30,000 milestone.
Despite the recent decline in price, Bitcoin has seen a 17% increase in value so far in March, having rebounded from its monthly low of below $19,800 on March 10. So far this year, Bitcoin’s value has increased by 66%, noting the significance that the cryptocurrency has registered in recent months amid the financial banking crisis.
Featured image from Unsplash, chart from TradingView.com
