Bitcoin price: Traders spared their reaction for the Fed’s decision

Bitcoin price reacted sparingly to the lower-than-expected US inflation readings on Tuesday. Notably, traders focus is on the Fed interest rate decision scheduled for later on Wednesday. On a broader perspective, some analysts are of the opinion that the crypto will remain under pressure in coming months.  

Risk assets’ outlook

Data released by the US Labor Department on Tuesday showed that inflation rose at a lesser pace of 7.1% in November compared to a year ago. The figure came in lower than the expected 7.3%. With the exclusion of the volatile food and energy components, core CPI rose by 0.2% and 6% on a month and annual basis respectively. In comparison, economists had predicted readings of 0.3% and 6.1%.

The figures were a sign that the inflationary pressures are easing. Theoretically, that a bullish driver for cryptocurrencies and the broader group of risk assets. Indeed, the US stock market recorded significant gains in reaction to the inflation data. For instance, the Dow Jones Industrial Average rallied to its highest level since 22nd April earlier on Wednesday at $34,721.01 after starting the week at an intraday low of $33,460.08.  

However, bitcoin price did not match the positive market sentiment. While the crypto recorded some gains on Tuesday, they were rather subtle. It has continued to trade below the once steady support level of $1,8160.96 as has been the case since early November.

Investors appear to have their focus on the Fed interest rate decision that is scheduled for later on Wednesday. Signs that the central bank will maintain its aggressive interest rate hikes will likely continue to weigh on bitcoin price.

According to VanEck’s head of digital assets research, Matthew Sigel, “Bitcoin will test $10,000 – $12,000 in Q1 amid a wave of miner bankruptcies, which will mark the low point of the crypto winter”.

Bitcoin price prediction

As seen on its four-hour chart,  bitcoin price remained above the 25 and 50-day exponential moving averages despite its subtle movements. As traders await the Fed interest rate decision, I expect the crypto to continue trading below the crucial resistance level at 18,160.96.

A hawkish Fed will likely yield a pullback to the 25-day EMA at 17,428.13 as the bears eye the lower level of 17,000. On the flip side, signs that the central bank will ease on its interest rate hikes will give the bitcoin price bulls an opportunity to retest a level last hit about a month ago at 19,000.

bitcoin price
bitcoin price

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