Bitcoin price retreated: pattern points to a comeback
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Bitcoin price has retreated after the Fed decision.
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The Fed decided to hike rates by 50 basis points.
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The inverted head & shoulders pattern points to more upside.
Bitcoin price pulled back on Thursday as the market reflected on the latest interest rate decision by the Federal Reserve. After soaring to $18,378 on Wednesday, Bitcoin retreated by 4% to $17,673. It is still substantially higher than the year-to-date low of $15,470.
Central banks downshift
The BTC/USD, BTC/GBP, and BTC/EUR prices declined slightly after central banks started to downshift their policies. On Wednesday, the Federal Reserve decided to hike interest rates by 0.50%, which was lower than the last four hikes of 0.75%.
And on Thursday, other influential central banks decided to lower the size of their rate increases. In the UK, the Bank of England (BoE) decided to hike rates by 0.50%, which was lower than the previous increase of 0.75%. The same happened in the European Union, where the European Central Bank (ECB) increased by 0.50%.
Federal Reserve decision
Bitcoin’s main catalyst was the Fed statement. In it, the bank sounded more hawkish and hinted that it will continue hiking in 2023. Precisely, it guided that it will deliver another 0.75% hike in 2023 before hitting a pause.
As such, it will likely hike interest rates by 0.50% in February following another 0.25% in March. Alternatively, it could deliver three 25 basis point increases, as we wrote in this article.
Still, I believe that the Fed was concerned about the falling bond yields and the signal they were sending. In the past few weeks, bond yields and mortgage rates have been falling. As such, the trend could spur more inflation in the coming months.
Bitcoin also reacted to the latest outflows from key exchanges, which is a signal that many investors are afraid of the industry. This is confirmed by the fear and greed index, which has dropped to 24. Binance has seen outflows worth $5.2 billion in the past 7 days.
Bitcoin price prediction
The 4H chart shows that the BTC price formed a bearish engulfing pattern on Wednesday. In price action analysis, this pattern is usually a bearish sign. A closer look shows that the coin formed an inverted head and shoulders pattern. The neckline of this pattern is at $17,437.
Therefore, I suspect that Bitcoin will form a break-and-retest pattern, which is a bullish sign. If this happens, it will likely resume the bullish trend as investors digest the latest decision. A such, the coin will likely rise to a high of $19,000.
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The post Bitcoin price retreated: pattern points to a comeback appeared first on BTC Ethereum Crypto Currency Blog.
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