Since the beginning of the week, bitcoin has been losing more than 9%. He suffered the greatest losses on Wednesday (April 6) after the publication of the minutes of the US Federal Reserve meeting. The cryptocurrency was noticeably declining along with the American stock indices.
The dollar index DXY jumped on the statements of representatives of the US Federal Reserve. Fed Governor Lael Brainard said that a rapid reduction in the Fed’s balance sheet could begin in May. The president of the Federal Reserve Bank of Kansas City, George, said that it is possible to raise the rate by 50 bps in May.
The minutes of the meeting held on March 15-16 indicate that the heads of the US Federal Reserve System signaled their readiness to begin reducing assets on the central bank’s balance sheet, which reached $8.9 trillion, by $95 billion per month.
Representatives of the US Federal Reserve believe that raising the rate by 50 basis points at once at one or more upcoming meetings will be justified. Expectations of an aggressive rate hike are weighing on the stock market. And since cryptocurrencies remain closely linked to the S&P500 and NASDAQ indices, they are also under pressure.
The FOMC meeting will be held on May 4.
According to the CME FedWatch Tool, the probability of a 50 bp rate increase is 80%.
The dollar index and the yield of ten-year US bonds update their highs daily. The consolidation of bitcoin below $45,000 casts doubt on the further growth of the BTC/USDt pair. Support is at $42,000, trading is going around this mark. There is no activity of buyers and increased volumes. Against this background, the risks of going below $42,000 have increased.
According to technical analysis, the price model from the low of $32917 resembles an ascending triangle. Volatility is decreasing, the trading range is narrowing. It is rare to see the figure of a right triangle for bitcoin, so a different price model is implemented anyway.
If buyers fail to rebound from $42,000, we expect a drop to $39950. Closing the day above $43445 will form a “bullish takeover” candlestick setup. If the growth is supported by increased volume, then again we can consider a recovery to $ 46,000. Uncertainty remains in the market and participants need new drivers for the rally.