This post presents a technical analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
The Fed has concluded its meeting without influencing bitcoin’s price in any significant manner. The central bank reduced rates by 25 basis points as anticipated, yet provided what appears to be hawkish forward guidance. Nevertheless, the dollar has been sold off.
In this environment, BTC continues to frustrate traders with its stagnant price movements.
The daily price chart shows little change since before the Fed meeting, with prices still trapped in a minor upward channel within a larger downtrend.
Any experienced technical trader would affirm that the strategy is straightforward at this point. A breakout above the bearish trendline suggests the downtrend from the peak has concluded. Conversely, if the price falls below the minor ascending channel, it reinforces the wider downtrend and may signal further losses.
Where is it headed? At the time of writing, the bullish scenario appears promising, as the MACD histogram, configured with parameters of (50,100,9) to assess medium to long-term trends, is nearing a crossover above zero (indicating potential bullish movement). Positive MACD crossovers typically signal renewed upward momentum.
The dollar index, one of BTC’s biggest adversaries, has suffered since the Fed meeting, undermining the central bank’s perceived hawkish stance. The DXY dropped to 98.13 on Thursday, its lowest since Oct. 17, and was last recorded at 98.36. A weaker dollar generally favors risk assets, including cryptocurrencies.
Significantly, the MACD histogram for the DXY has turned negative, indicating a shift towards bearish momentum.
Nasdaq has rebounded after the November drop, currently trading above the commonly referenced 50-, 100-, and 200-day simple moving averages, providing bullish signals for the crypto market. Finally, BTC sellers appear to have lost energy, as prices remain stable even in light of reports indicating that the U.S. Senate’s crypto market structure bill has encountered obstacles.
If BTC prices do experience a breakout, several resistance levels between $97,000 and $108,000, identified by the 50-, 100-, and 200-day simple moving averages (SMA) and the Ichimoku Cloud, will come into play.
However, ETF flows continue to raise concerns. As mentioned on Thursday, there hasn’t been a single day with net inflows exceeding $500 million in the last month. Although prices have stabilized since Nov. 20, cumulative net inflows since the last week of November have totaled just $219 million, based on data from SoSoValue. This figure pales in comparison to the billions withdrawn during October and early November.
While the Nasdaq trading above its key moving averages is favorable for BTC bulls, the cryptocurrency’s correlation with the tech index has become skewed. Bitcoin tends to drop more sharply when the Nasdaq declines, yet climbs only slightly during Nasdaq rallies.
Therefore, we cannot dismiss the possibility of a bear scenario for BTC, which would involve a breakdown below the minor ascending channel, exposing support around $80,000.
