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Bitcoin shakes of Fed volatility as analysts remain split on return under $24K


On May 18, Bitcoin (BTC) crossed the $30,000 mark as new comments from the US Federal Reserve caused a surge in volatility.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Extra Fed bitcoin rate hikes “biggest risk”

BTC/USD has been stabilising inside a range since May 12th, according to data. During the Wall Street Journal’s Future of Everything Festival, Fed Chair Jerome Powell gave economic policy ideas.

In an interview with the paper’s top economics correspondent, Nick Timiraos, he said: “I don’t know if financial circumstances have tightened more than this in a very long time.”

Powell seemed to indicate that the Fed’s Federal Open Markets Committee (FOMC) will continue to raise key interest rates by 50 basis points in future meetings, with “neutral” levels possible in Q4. Hikes after that, on the other hand, may be necessary to keep inflation under control.

Powell avoided surprises since traditional markets had already priced in such a scenario.

BTC/USD dropped to $29,500 for a brief moment before recovering during Powell’s remarks.

Crypto market observers, on the other hand, had nothing in the way of highly bullish news as risk assets face difficult times as financial tightening continues.

“A scathing warning For markets, this is the greatest danger “On the possibility of continued rate hikes into next year, macro expert Alex Krueger responded with a series of Twitter posts:

“What ‘neutral’ means to each Fed official is different. The range of estimates is between 2% and 3%. By December, the futures market will have priced in 3.25%.”

Markets anticipate a target rate of 275 to 300 basis points at the FOMC’s December meeting, according to CME Group’s FedWatch Tool.

Target rate expectations for December 2022 FOMC meeting. Source: CME Group

$33,000 “makes sense” next

“Had a nice close above the $28.8K range low as well as the $30K low that indicated the initial wick down in May 2021.” The $33K level is the next level of HTF resistance. In his most recent Bitcoin-focused post, popular trading account Daan Crypto Trades noted, “A test of that area makes sense IMO.”

Meanwhile, DonAlt, a fellow account, identified $34,500 as a critical breaker for a more positive outlook on BTC to enter.

According to reports, a rising number of players still favour a return to the $23,800 lows observed last week during the Terra LUNA and TerraUSD (UST) implosion.

On the day, trader Crypto Tony advised Twitter followers, “Bottoms take time to form, therefore do not expect it within the next day or two.”

“We’ll most likely find support, bounce for some relief, and catch late shorts to keep the trend going.”

Bitcoin funds saw largest single week of outflows since June 2021

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