FED comes up with new program, BTC surges past $30,000

Yesterday, Bitcoin briefly surged past the $30,000 mark amid news about a new Federal Reserve program named Novel Activities Supervision Program. The statement on the central bank’s website says, “The Program will focus on novel activities related to crypto-assets, distributed ledger technology (DLT), and complex, technology-driven partnerships with nonbanks to deliver financial services to customers. The Program will be risk-focused and complement existing supervisory processes, strengthening the oversight of novel activities conducted by supervised banking organizations.” While this new program is positive for the industry, we often deem moves made on the news as mere noise. As a result, we have some doubt about the most recent action in Bitcoin and whether it will be sustainable. Our stance comes from the fact that there has not been any significant growth in the number of Bitcoin addresses (following Bitcoin’s breakdown below $30,000) with balances exceeding 1,000 BTC, suggesting that big players are still waiting on the sidelines. In addition to that, we saw a similar short-lived euphoria about a week ago when MicroStrategy announced that it would buy more Bitcoin worth $750 million, and Bitcoin temporarily broke above $30,000, only to fall again later.

Right now, we are paying close attention to MACD on the daily time frame as it hovers slightly below the midpoint. If it fails to move above it, it will be bearish. However, if it manages to break through the midpoint to the upside, it will be bullish for the short term. Besides MACD, we also watch RSI and Stochastic on the daily chart. Both indicators are showing signs of growth, which is bullish. However, if they start flattening and reversing, it will be bearish. Overall, the trend is turning neutral, and we will likely see more choppiness ahead.

Illustration 1.01
Illustration 1.01 shows the daily chart of MACD.

Technical analysis gauge
Daily time frame = Neutral
Weekly time frame = Slightly bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
It seems our assessment of the news being merely a noise was correct. Bitcoin failed to hold above $30,000 and fell back below $29,500. The chances of more downside remain.


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