Bitcoin price remained above the psychological level of $20,000 after rallying above it on Tuesday. Hopes that the Fed will temper its interest rate hikes has improved the risk sentiment. Even so, fear remains the key emotion in the crypto market amid concerns over high inflation and a probable recession.
Fundamentals
Even with the recorded gains, traders appear aware that the crypto market will likely not have a strong rally in the short term. In fact, the rallying on Wednesday did not attract enough buyers to break the resistance at $21,000.
High inflation and concerns over a probable recession have lowered investors’ interest in riskier assets. The crypto fear & greed index has been in the fear end of spectrum for several months now. In the past week, the crypto market exuded extreme fear amid the persistent concerns over an ultra-hawkish Fed.
The fears were heightened by Fed officials’ remarks that the US central bank is keen on dealing with the high inflation despite the economic pain. For instance, Philadelphia’s Fed President stated, “We are going to keep raising rates for a while. Given our frankly disappointing lack of progress of curtailing inflation, I expect we will be well above 4% by the end of the year”.
However, those fears have been eased in the current week amid hopes that the Fed will consider less aggressive rate hikes by the end of the year. With the subsequent improvement of the risk sentiment, Bitcoin price to its highest level since mid-September on Wednesday.
Even so, fear remains the key emotion driving the crypto market. As at the time of writing, the crypto fear & greed index was at 32. Seeing that concerns over the stability of the global economy persists, Bitcoin price will likely under pressure in the short term.
Bitcoin price prediction
As seen on its four-hour chart, BTC/USD is trading above the 25 and 50-day exponential moving averages. While this is a signal for further gains in the ensuing sessions, I expect them to be curbed.
In particular, the range between the 25-day EMA at 20,134.98 and the resistance level at 21,069.28 will be worth watching. Below the range’s lower border, the bears will have an opportunity to push Bitcoin price back below the psychologically crucial level of 20,000. If that happens, 19,657.75 will likely be its next support level.
