Bitcoin price falls below $27K in wake of Fed rate hike

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(Kitco News) – The Federal Reserve raised interest rates by 25 basis points on Wednesday, a move largely in line with expectations, sparking a bout of volatility in the crypto market and sending asset prices tumbling across financial markets.

Ahead of the Fed’s announcement, US stocks were higher on the day and saw a spike to the upside as the announcement approached, only to crash into the red after Fed Chair Powell’s press conference, ending a two-day winning streak. At the close of trading, the S&P, Dow and Nasdaq were down 1.65%, 1.63% and 1.60% respectively.

Data provided by TradingView shows that, after trading near $28,300 during the morning session, Bitcoin (BTC) surged to a peak of $29,114 shortly before Powell’s presser, then reversed sharply and plunged below the $28,000 and $27,000 support levels to hit a low of $26,810.

BTC/USD 4-hour chart. Source: TradingView

Before the afternoon’s events, Kitco senior technical analyst Jim Wyckoff wrote that “Prices are in a routine break after hitting a contract high on Monday. Bulls continue to have solid near-term technical advantage amid another price rally in place on the daily bar chart.”

While Wyckoff suggested that “More upside is likely in the near term” in his morning Bitcoin update, the effect of Powell’s comments on the market appears to have broken the “new price uptrend” and given bears the opportunity to take control of price action.

Consolidation after the interest rate increase

According to analysts at Eight Global, the recent surge in the Bitcoin price was a break from the longest accumulation period in history. “This shows us the strength currently in the crypto market, and thus the confidence of market participants,” they wrote in a morning update ahead of the Fed’s rate hike.

“Currently, BTC has reached a strong resistance zone, namely the $28.5-32.5k zone. BTC will not go through this easily, so this is a logical place for many to lock in profits,” the analysts wrote. “Should BTC reject here, the chances are high that we will see a correction towards the old high area. This zone around $25-25.5k will then start to serve as support.”

BTC/USD 2-Day Chart. Source: Eight Global

Eight Global noted that if Bitcoin can manage to continue consolidating in the resistance zone, “chances are that it will eventually break through, moving towards $37-38K. This would mean another ~25% price increase.”

Following Powell’s announcement, Eight Global founder Michaël van de Poppe posted the following tweet as a follow-up to the morning update, saying he “expects some consolidation before continuation” for Bitcoin.

#Bitcoin hit $28,700 and follows scenario 1, still.

Powell is likely to remain hawkish and do his standard thing, as he continued to hike at 25bps as well.

I think we are going to top out for now and have some consolidation before the continuation.

Interested for $25k. pic.twitter.com/ckWYqu5jkL

— Michaël van de Poppe (@CryptoMichNL) March 22, 2023

Altcoins are getting hammered

The downturn in Bitcoin hit the altcoin market hard, with most tokens in the top 200 plunging into the red for the day while a few projects managed to stay in the green due to improving fundamentals.

Daily performance in the cryptocurrency market. Source: Coin360

A 12.76% increase for iExec RLC (RLC) was the most notable increase of the day, while Gitcoin (GTC) increased its prices by 12.48% and Blur (BLUR) rose by 9.69%.

The total cryptocurrency market cap is now $1.16 trillion, and Bitcoin’s dominance rate is 46.2%.