Bitcoin price whipsaws as Fed signals interest rates will continue to rise

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(Kitco News) – Federal Reserve Chairman Jerome Powell revealed that the central bank will raise the benchmark interest rate by another 50 basis points on Wednesday, a move that was largely in line with expectations. The crypto market had a “sell the news” type reaction to the announcement as prices mostly fell after the decision was revealed.

There was a similar response in the traditional markets, as the major indexes fell into the red after being in the green before Powell’s announcement. At the close of the markets, the S&P, Dow and Nasdaq all finished in the negative, down 0.61%, 0.42% and 0.76%, respectively.

Data from TradingView shows that the Bitcoin (BTC) price went through a bit of a whipsaw in response to the announcement, with the top crypto hitting an intraday high of $18,377 only to plunge to a low of $17,663 in the hours before the bulls bid it back to support over $17,800.

BTC/USD 4-hour chart. Source: TradingView

The $18,377 peak marked a five-week high for the top crypto according to Kitco senior technical analyst Jim Wyckoff, who noted that “This week’s price action has produced a bullish upside breakout from a choppy and sideways trading area on the daily bar chart, to suggest that a price uptrend will develop.”

Going forward, “bulls have the near-term technical advantage and have momentum on their side,” Wyckoff said, in a possible sign that the worst of crypto winter may now be in the past.

Look for a retest at $17,200

The daily chart for Bitcoin shows that Wednesday’s upward move has lifted it back to the range it was trapped in from June to early November when the collapse of FTX sent its price plunging.

BTC/USD 1-Day Chart. Source: Eight Global

Eight Global founder Michaël van de Poppe noted that the return to this area for Bitcoin was “very important for further upward momentum” in his latest newsletter to subscribers.

“Within this area, we can see that we have a lot of inefficiency left over from all the chaos that happened during the month of November. Inefficiency tends to act as a magnet for price, filling up the inefficiency will cause the chart to rebalance again, Poppe said. “Getting positive signs at tonight’s press conference is likely to see the price move towards at least $18.6,000.”

While the market initially reacted positively to Powell’s announcement, a more hawkish stance emerged as the Fed chair elaborated on the central bank’s outlook, preventing Bitcoin from reaching Poppe’s $18,600 target.

Going forward, “The main area of ​​long-term interest is the region around $17.2,000,” according to Poppe, who suggested that “getting back towards this level could give us a clean support/resistance flip.”

And in a message meant for the bears out there praying for new lows, Poppe posted the following tweet that adds context to the weakness seen in the market over the past month and a half.

Markets fell from $20K to $15.6K due to the FTX collapse.

We are currently trading at $18K, slightly higher than the June low.

I understand the bearish thesis, but this is honestly a sign of strength for #Bitcoin.

— Michaël van de Poppe (@CryptoMichNL) 14 December 2022

A mixed reaction in the altcoin market

The altcoin market’s response to today’s interest rate announcement from the Fed was mixed, with half of the market up on the day while the other half was in the red.

Daily performance in the cryptocurrency market. Source: Coin360

The day’s top performers included Digibyte, which gained 20.88%, a 10.93% increase in the price of Toncoin (TON) and an 8.53% gain for BinaryX (BNX)

The total cryptocurrency market cap is now $867 billion, and Bitcoin’s dominance rate is 39.5%.