Bitcoin, the world's largest cryptocurrency, has been on a rollercoaster ride lately. The cryptocurrency started a downside correction from the $28,500 resistance zone, finding support near $26,600. Despite a bearish reaction to the Federal Reserve's rate hike from 4.75% to 5%, BTC is attempting a fresh increase, currently trading above the $27,000 resistance.
Technical Analysis
Bitcoin is currently trading below $27,800 and the 100 hourly simple moving average. There was a break below a key bullish trend line with support near $27,900 on the hourly chart of the BTC/USD pair. However, BTC has climbed above the 23.6% Fib retracement level of the downward move from the $28,879 swing high to $26,623 low. An immediate resistance is near the $27,750 level, followed by the 50% Fib retracement level of the downward move from the $28,879 swing high to $26,623 low. The next major resistance is near the $28,000 zone, and a close above it could start another major increase, sending the price towards the $28,500 level.
On the downside, an immediate support is near the $27,000 zone, followed by the $26,600 zone. Any further losses might send the price towards the $26,000 support zone, with the next major support at the $25,200 level. The MACD is now losing pace in the bearish zone, and the RSI for BTC/USD is below the 50 level.
Factors Affecting Bitcoin's Price Movement
The Fed's rate hike is one of the factors affecting Bitcoin's price movement. An increase in interest rates can boost the US dollar, making it more expensive for investors to buy Bitcoin. The news caused BTC to decline below the $27,500 support zone, with a break below a key bullish trend line with support near $27,900 on the hourly chart of the BTC/USD pair. The pair even traded below the $27,000 level before finding support near $26,623.
However, Bitcoin's price movement is also influenced by various other factors. One of the primary drivers is institutional adoption. More and more institutions are investing in Bitcoin, recognizing it as a viable store of value and a hedge against inflation. Recently, the US Securities and Exchange Commission (SEC) approved the first Bitcoin Futures ETF, providing investors with a regulated way to gain exposure to Bitcoin.
Another factor is the global economic uncertainty caused by the COVID-19 pandemic. The pandemic has disrupted global supply chains and led to unprecedented levels of government stimulus, resulting in inflation. Bitcoin, being a decentralized currency with a finite supply, is viewed by many as a hedge against inflation.
Conclusion
Bitcoin is attempting a fresh rally despite the Fed's rate hike, finding support near $26,600 and currently trading above the $27,000 resistance. Technical indicators suggest that BTC could rally again if there is a clear move above the $28,000 resistance zone. However, the cryptocurrency is still facing resistance at the $27,750 and $28,000 levels. Any further decline might send the price toward the $26,000 support zone, with the next major support at the $25,200 level.
Bitcoin's price movement is influenced by various factors, including institutional adoption, global economic uncertainty caused by the COVID-19 pandemic, and regulatory developments. While the Fed's rate hike had a short-term impact on BTC's price, the cryptocurrency's long-term outlook remains bullish due to its increasing adoption by institutions and its potential to serve as a hedge against inflation.
Investors and traders must keep a close eye on BTC's price movement and technical indicators to make informed trading decisions. Despite the short-term fluctuations, Bitcoin's long-term potential as a viable investment asset cannot be ignored.
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