Bitcoin Traders Aim to Test the $53,000 Support Level as BTC Price Predictions Remain Bearish After Fed Meeting
Bitcoin traders are focusing on the $53,000 support level as the price of BTC consolidates in the mid-$57,000s. Although the price is down about 5% for the day, it is still up around 1.5% or $1,000 from earlier lows. Traders are evaluating the potential impact of the latest policy announcement from the US central bank on the outlook for Fed rate cuts this year.
As expected, the Federal Reserve has maintained interest rates at multi-decade high levels of 5.25-5.5% and has slowed down its balance sheet run-off. The central bank will now allow its portfolio of assets to shrink by only $25 billion per month, compared to the previous rate of $60 billion per month. The reduction in the balance sheet size was more significant than some investors had anticipated, which may explain the market’s dovish reaction to the policy announcement.
Bitcoin initially surged to the mid-$59,000s, and US stocks also experienced gains, but these movements quickly reversed. Currently, Bitcoin is trading at a level similar to where it was before the Fed’s announcement.
Fed Chair Jerome Powell acknowledged the higher-than-expected inflation data recorded so far this year and stated that gaining confidence to cut interest rates will take longer than expected.
According to CME data, the implied probability of a 25 bps interest rate cut by September has risen to 54% from 46% in the previous day, while the probability of no rate cuts this year has dropped to 16% from 27%.
Overall, the market interpreted the Fed meeting as slightly more dovish than expected, leading to the bounce in the Bitcoin price from its lows.
The technical indicators suggest that the Bitcoin price may experience further downside. Before the Fed meeting, Bitcoin had already dropped nearly 5% from just below $61,000, following a 5% decline from around $65,000 on the previous day. The decrease in price coincides with US economic data indicating persistent inflation pressures and accelerated outflows from Bitcoin ETFs.
According to data presented by The Block, US Bitcoin ETFs have experienced outflows for five consecutive days.
Significantly, the dip on Wednesday caused Bitcoin to break below its two-month range of $60,000-$74,000. The next significant support level for Bitcoin is not until the mid-February highs at $53,000.
Many analysts are now predicting that the BTC price will reach the low $50,000s. Some analysts are closely monitoring the average entry price of US Bitcoin ETF buyers at $57,300.
“There might have been lots of ‘TradFi’ tourists in crypto pushing longs into the halving,” wrote Markus Thielen, CEO of 10x. “This time is now over. We expect more unwinding as… Bitcoin trades below $57,300. This will likely lower prices to… a -25% to -29% correction from the $73,000 top. That explains our price target of $52,000/$55,000 during the last three weeks.”
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
