Bitcoin - No crypto island is happening

For some time before the FED meeting, we warned investors that another rate hike would spook the market, leading to weakness across all sectors. Additionally, we speculated that an irrational and short-lived bounce in the price of BTCUSD could occur after the decision due to retail investors buying a dip in hopes of the FED pivot in 2022 or 2023.

However, that was not a message Jerome Powell sent to the market. Instead, he reiterated his hawkish stance toward continuing interest rate increases throughout 2022 and 2023. Based on the dot-plot presented by the chair of the Federal Reserve, the first decline in interest rates can be expected in 2024. That suggests the economy will remain under significant tightening pressure throughout 2023 and likely during the first half of 2024. In turn, that leads us to speculate about the continuation of worsening economic conditions and data, further deepening a recession and risk aversion.

In addition to that, yesterday's price action proved our assessment about the initial bounce and dump correct, with Bitcoin halting its rise slightly below 20 000 USD (right after the decision) and then retreating to the vicinity of 18 000 USD.

In our opinion, this elevated volatility only highlights the bearish sentiment in the market and the high level of anxiousness among market participants. Furthermore, technical indicators across the daily, weekly, and monthly time frames also support the bearish notion. Because of that, we have no reason to backtrack on our bearish views, and we stick to price targets of 17 500 USD and 15 000 USD.

Illustration 1.01
Illustration 1.01 shows the immediate price action of BTCUSD on the 1-minute chart after the FED decision.

Technical analysis - daily time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.

Illustration 1.02
Illustration 1.02 shows the daily chart of BTCUSD, two SMAs, and simple support/resistance levels. A new low below the immediate support was constituted, bolstering the bearish case for BTCUSD.

Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.

Please feel free to express your ideas and thoughts in the comment section.

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.

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