The release of the Federal Open Market Committee (FOMC) Minutes last week sparked a pivotal shift in market dynamics, particularly for Bitcoin (BTCUSD) and the U.S. Dollar.
Bitcoin’s impressive 20% year-to-date rally hit a roadblock as the cryptocurrency posted its first weekly loss in four weeks. Concurrently, the U.S. Dollar gained momentum following the tempered rate cut expectations outlined in the FOMC Minutes. The Fed’s hawkish stance, signalling reluctance to cut rates until inflation eases further, bolstered the Dollar’s position, reflected in the decline of rate cut probabilities for May from 50% a month ago to 19.5%.
Traders now await the release of the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge. Should the outcome of this data validate the Fed’s stance, it could potentially further elevate the Greenback at the expense of Bitcoin.
Technical
Bitcoin has shown a consistent upward trend, staying above the 100-day moving average, indicating strong bullish momentum.
The recent increase in price started from a supportive level at 48327.81, showing a strong base for the upward movement. However, as buying pressure decreased, the rally faced resistance and entered a consolidation phase characterized by a rectangle pattern.
This sideways movement suggests a temporary balance between buyers and sellers, with neither side gaining dominance. A breakout from this pattern, whether upward or downward, will likely determine Bitcoin’s future price direction. A breakout with high trading volume above the pattern may suggest a continuation of the upward trend, with the 54000 level serving as a key resistance point. Conversely, a breakdown below the consolidation pattern could indicate a shift towards a downward trend, potentially resulting in a retest of the 48327.81 support level.
Summary
BTCUSD faces a pivotal moment as FOMC Minutes spurred U.S. Dollar strength, halting Bitcoin’s rally. Technical analysis shows BTCUSD in consolidation, with a breakout potentially dictating future direction. A breakout could open the door to either the $54,000 or $48,327.81 levels.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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