Bitcoin price climbs above $19,200 as risk takers buy the dip
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(Kitco News) – Price action across the cryptocurrency market was relatively muted on Thursday as investors continued to digest the latest 75 bps hike from the Federal Reserve and the ramifications it could have on global asset prices.
Things weren’t much better in the traditional markets, which plunged into disarray after yesterday’s comments from Fed Chairman Jerome Powell. The Dow, S&P and Nasdaq all ended the day in the red, down 0.35%, 0.87% and 1.37% respectively.
Data from TradingView shows that Bitcoin (BTC) managed to climb back above $19,200 in the afternoon trading sessions after falling to a low of $18,180 late Wednesday, its lowest price since mid-June.
BTC/USD 4-hour chart. Source: TradingView
The lack of activity on Thursday was addressed in the morning Bitcoin brief by Kitco senior technical analyst Jim Wyckoff, who simply said, “Not much new late this week.”
According to Wyckoff, “The bears have the overall near-term technical advantage amid a price downtrend in place on the daily chart. The path of least resistance for prices is currently sideways to lower.”
Sideways for the foreseeable future
Yesterday’s comments by Fed Chair Powell, in which he “expressed that in order to see inflation go back down, unemployment has to go up,” were not taken kindly by the crypto market, according to David Lifchitz, managing partner and chief investment officer at ExoAlpha.
“It basically means that the Fed will continue its tightening process for the foreseeable future,” Lifchitz said, “which the market didn’t like as they were expecting some hint of when the Fed will stop raising interest rates. Expectations are now at a high level of 4.6% in 2023 from the 3-3.25% range we are in today.
The reaction from the market was evident as BTC “swinged wide in a 10% amplitude move the minute after the Fed announcement, jumping up and down with chunks of $300+ on each tick, translating to a bid-ask spread of about 1.5% to 2% of the current value.”
This led to tight stop-loss traders being stopped before they could react, allowing high-frequency market makers to come in and “milk the order book while pretending to serve it”, reminiscent of a scene from Michael Lewis’s Flash Boys .
According to Lifchitz, liquidity in the crypto market has been endemic since mid-summer, with Bitcoin mostly stuck in a narrow band between $18,500 and $19,500, “with some escapes a little below $18k or above $20k that didn’t last long before going back.”
“As far as I can tell, there is no risk appetite these days given the macro-geopolitical and economic environment, to push BTC up,” Lifchitz said. “I found it interesting to note that there is also no willingness to let BTC go below $18K as it always bounces back to its $18.5K-$19.5K range. Every dip below $18,000 is furiously bought .”
The COO surmised that some traders may position themselves at the moment when markets perceive the Fed to be swinging, “which could be a ‘buy the rumor and buy the news too’ type of event,” but warned that risks such as a escalation in the Ukraine-Russia war or an invasion of Taiwan by China could lead to future declines.
“However, until we reach one or the other of these events, I expect BTC to continue to bounce in its range, gently pushed around by high-frequency traders and arbitrageurs in a directionless fashion,” Lifchitz concluded.
Altcoins are gaining a bit
Despite a drop in trading volume, a majority of tokens in the top 200 traded in the green on Thursday as traders with an appetite for risk scooped up tokens at fire sale prices.
Daily performance in the cryptocurrency market. Source: Coin360
Notable gains on the day included Reserve Rights (RSR), which gained 17.57% and is currently trading at $0.00655, XRP, which climbed 14.32% to trade at $0.47, and Algorand (ALGO), whose price rose 14.3% to trade at $0.368.
The total cryptocurrency market cap is now $936 billion, and Bitcoin’s dominance rate is 39.4%.
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.
