Crypto Daily - Bitcoin (BTC) managed to make a 5% move to the upside on Wednesday as the Federal Reserve FOMC meeting took place. It was announced after the meeting that interest rates would stay the same, but that growth was forecast to slow, with slightly elevated inflation and unemployment also predicted. How will Bitcoin fare in this kind of environment?
The Fed is as uncertain as the market
In Fed Chairman Powell’s speech at the FOMC meeting on Wednesday, it became clear that the Federal Reserve is just as uncertain as the market over what will become of the U.S. economy. When questioned about the possibility of a recession, Powell answered that there was a 1 in 4 chance of a recession in any given year.The Fed chairman admitted in his remarks that the Federal Reserve expected growth to decline through 2025, and that inflation would be likely to rise slightly. In spite of maintaining that the jobs market was strong, he predicted that unemployment was also likely to rise in 2025.
With AI already having a big effect on jobs, especially those in the white collar sector, it must be a simple matter to predict a rise in unemployment in 2025. That said, the potential exponentiality in the rise of AI to take over from human workers, could be vastly underestimated.
How will Bitcoin react?
In the face of such huge uncertainty how is Bitcoin likely to react? There are many factors at play here, but probably the major one is the likelihood that the Treasury prints a lot of currency, in order to refinance debt, cover deficits, and stimulate the economy. Global liquidity is creeping higher, and this is exactly the sort of climate in which Bitcoin can thrive. Nevertheless, if the current downturn in the stock market evolves into a crash, it might be expected that Bitcoin would also take a plunge.$BTC punches through descending trendline
Source: TradingView
In the short-term 4-hour chart it can be seen that $BTC was able to punch through the local descending trendline. However, with all the short-term Stochastic RSIs now generally in the overbought area, a downward impulse could follow from here. If this took place, a test of the descending trendline would be a good site for a bounce.
If the price does continue up, the major descending trendline is resistance, which could also coincide with horizontal resistance at $91,000.
Weekly chart looking favourable for $BTC
Source: TradingView
The weekly chart continues to look very favourable towards Bitcoin. The major support band, which encompasses the top of the 2021 bull market, and the top of the 8-month-long bull flag, is a huge buttress under the price. The wick down to just under $77,000 may be the closest the $BTC price will get to this bottom.
Above this, the horizontal support level at $80,000 has been building in strength. This could be the firm base from which $BTC will go higher. On this weekly time frame the resistance level at $91,000 could be the magnet that is drawing the price higher. This level looks to be key for whether the bull market will continue, or whether this could be a failed rally.
The RSI, and the Stochastic RSI indicators at the bottom of the chart are both signalling a continuance of an upside move.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.