Here’s why a 0.75% interest rate hike could be bullish for Bitcoin and altcoins
The S&P 500 and Nasdaq Composite index posted their worst weekly performance since June as investors remain concerned that the Federal Reserve will need to continue its aggressive monetary policy to curb inflation and that could lead to a US recession.
Bitcoin (BTC) remains closely correlated to the S&P 500 and is on track to fall more than 9% this week. If this correlation continues, it could bring more pain to cryptocurrency markets as Goldman Sachs strategist Sharon Bell warned that aggressive rate hikes could trigger a 26% drop in the S&P 500.
Most expect the Fed to raise interest rates by 75 basis points at its next meeting on September 20-21, but the FedWatch Tool shows an 18% probability of a 100 basis point rate hike. This uncertainty can keep traders on edge, resulting in increased short-term volatility.
If the Fed’s rate hike is in line with market expectations, select cryptocurrencies could attract buyers. Let’s study the charts of five cryptocurrencies that are bullish in the short term.
BTC/USDT
Bitcoin recovered from $19,320 on September 16 and rose above $20,000 on September 17, but the bulls are struggling to sustain the higher levels. This suggests that bears are active at higher levels.
The 20-day exponential moving average ($20,432) has settled down gradually and the relative strength index (RSI) is in the negative zone, suggesting that sentiment remains negative and traders are selling near overhead resistance levels.
If the price continues lower and breaks below $19,320, the BTC/USDT pair could fall to $18,510. Buyers are expected to defend this level vigorously.
On the upside, the 50-day simple moving average ($21,605) is the key level to watch. If bulls push the price above them, the pair could rise to $25,211. A break and close above this resistance could indicate the start of a new uptrend.
The 4-hour chart shows that the sellers are trying to stop the recovery at the 20-EMA. This indicates that the bears are in no mood to give up their advantage. If the weakness persists and the price breaks below $19,320, the pair could slide to $18,510.
Conversely, if the price goes up from the current level and breaks above the 20-EMA, the recovery may extend to the 50-SMA. This level could again act as a resistance, but if this obstacle is cleared, the next stop could be the 61.8% Fibonacci retracement level at $21,470.
XRP/USDT
Ripple (XRP) has been stuck in a range between $0.30 and $0.39 for many days. The price has reached the resistance of the series, and if bulls clear this hurdle, it could signal the start of a new uptrend.
In a range, traders typically buy near support and sell near resistance. If the price breaks down sharply from today’s level and breaks below the moving averages, it will indicate that the XRP/USDT pair may extend its consolidation for a few more days.
Although the moving averages are crossing each other, the RSI has jumped into positive territory, indicating that bulls have a slight advantage. If buyers drive and sustain the price above $0.39, the pair could rise to $0.48.
The pair rallied sharply from $0.32 to $0.39, indicating strong buying by the bulls. The 20-EMA has emerged and the RSI is in the positive zone, suggesting that the path of least resistance is up.
If the price continues higher and breaks above $0.39, the bullish momentum could pick up and the pair could rise to $0.41. This level could act as a resistance, but if buyers turn the $0.39 level into support, the up move could resume.
LINK/USDT
Chainlink (LINK) has been stuck in a large range between $5.50 and $9.50 in recent weeks, indicating that buyers are trying to form a bottom. The bulls pushed the price above the moving averages and the RSI jumped into positive territory, indicating that the positive momentum may improve.
There is a small resistance at $8.30, and if bulls push the price above it, the LINK/USDT pair could increase to the stiff resistance at $9.50. This level is likely to attract aggressive selling by the bears, but if bulls break through the barrier, it could indicate the start of a new uptrend.
The moving averages are the important support to look for on the downside, because if they give way, selling pressure can pick up. It could start a decline to $7 and then to $6.20.
Buyers are trying to defend the moving averages on the 4-hour chart. It could start a recovery towards the overhead resistance at $8.20. If the price rises above this overhead resistance, the pair could rise to $9.
If bulls fail to push the price above $8.20, the bears may fancy their chances and try to sink the pair below the moving averages. That could tilt the advantage in favor of the bears. The pair may first go down to $7.50 and then to $7.
Related: Dogecoin has crashed 75% against Bitcoin since Elon Musk’s SNL appearance
EOS/USDT
The bears pulled EOS below the 50-day SMA ($1.44) on September 15, but could not break the $1.34 support. This suggests that bulls are buying on the dip and trying to form a low near $1.34.
A minor negative is that bulls are facing strong resistance at the 20-day EMA ($1.50). This indicates that the bears have not given up and are trying to wrest control. This battle between the bulls and the bears is likely to resolve with a strong breakout.
If the price breaks above the 20-day EMA, the bullish momentum could pick up and the EOS/USDT pair could rise to $1.86. Alternatively, if the price declines and breaks below $1.34, the pair could fall to $1.24. A break below this support could drop the pair to $1.
The rally faltered near $1.50, indicating bears are continuing to sell on the rally. The bears will try to cement the edge further by pulling the price below the strong $1.34 support, but it may not be that easy.
Buyers have defended the $1.34 level on three occasions and will again try to do so. If the price pulls back from $1.34, the bulls could again try a rally above the $1.50 overhead resistance. If they manage to do that, a rally to $1.70 and later to $1.86 is possible.
XTZ/USDT
Tezos (XTZ) broke below the 20-day EMA ($1.57) on September 13, but the bears could not pull the price to the support line of the symmetrical triangle. This indicates that buyers are accumulating on dips and not waiting for a deeper correction to make an entry. This increases the likelihood of an improvement in the short term.
If the price breaks above the 20-day EMA, the XTZ/USDT pair could rise to the 50-day SMA ($1.66). This level has acted as strong resistance on two previous occasions, so it is an important level to keep an eye on. If bulls overcome this barrier, the pair may attempt a rally to the resistance line of the triangle.
A break above the triangle will signal a potential trend change. The pair may then rise to $2 and later to $2.36.
Meanwhile, the bears likely have other plans. They will try to stop the recovery at moving averages. If the price breaks down from the current level and falls below the $1.50 to $1.40 support zone, the June low of $1.20 could be resumed.
The 4-hour chart shows that the bulls defended the support at $1.50 and pushed the price above the downtrend line, but they could not sustain the higher levels. If bears lower the price below $1.50, the pair could fall to $1.40.
On the other hand, if the price bounces back from the $1.50 support again, it would indicate that lower levels continue to attract buyers. The bulls will then try to push the price above the moving averages and challenge the $1.62 resistance. If this level gives way, the rally could reach $1.70.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade involves risk, you should do your own research when making a decision.
