Bitcoin ($BTC) plummets as Fed Chair Powell talks the market down

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As a seasoned researcher with years of market analysis under my belt, I must say that Wednesday’s FOMC meeting was a stark reminder of the unpredictable dance between central banks and global markets. The Fed Chair Powell’s announcement of limited rate cuts for 2025 sent shockwaves through the financial world, leaving Bitcoin and other cryptocurrencies in its wake.

On Wednesday during the FOMC meeting, Fed Chair Powell stated that there might be only two interest rate reductions in 2025. This announcement led to a decline of approximately 5.7% in the price of Bitcoin ($BTC), causing it to drop below $100,000, as other markets also experienced losses.

Powell speech sends markets crashing

On Wednesday, Jerome Powell, Federal Reserve Chairman, concluded the FOMC meeting with his usual address. He revealed a 25 basis points reduction in interest rates, an action the market had anticipated and prepared for. However, as his speech progressed, he hinted that there would probably be just two more adjustments throughout the entire year 2025.

Additionally, the revised dot plot diagram now indicates that each Federal Reserve member anticipates an increase in interest rates by 0.5 percentage points.

Initially, as the news became clear, the U.S. stock market experienced a significant drop, on the other hand, the value of the dollar surged upward. The price of Bitcoin dipped to approximately $6,000 during that day, and most altcoins suffered losses across various markets.

At Federal Reserve meetings (FOMC), the Fed often faces an intricate balancing act. On one hand, it recognizes the urgent need to stimulate job growth due to the grim employment situation. On the other hand, it aims to prevent inflation from flaring up again. So, during these meetings, if the Fed decides to lower interest rates (rate cut), but simultaneously sounds very cautious or even aggressive (hawkish) in its subsequent speech, this strategy is effective in curbing market excitement.

$BTC price touches bottom of ascending channel

Regarding Bitcoin’s price, it seems like a typical day in the market. Although the decline happened swiftly and sharply, the bears could only manage to push the price back to the lower boundary of the upward trending channel, where it now appears to be moving within.

Previously, the Bitcoin price dipped beneath a line it had been adhering to since November 4th. It’s uncertain if the bulls can seize control again and drive the price over this line. At present, the price is touching the trendline, so we may witness either a rejection of further drops or the price breaking through and resuming its ascent toward the top of the rising channel.

Weekly chart nothing out of the ordinary for $BTC

In the weekly chart perspective, nothing seems unusually happening with Bitcoin’s price. However, the large candlestick from last week, known as a “hammer,” along with several recent candles having long wicks towards the downside, suggests that an increase in price may be imminent.

Glancing at the base of the graph, you’ll notice that the RSI (Relative Strength Index) line is now heading downwards again. However, the 70.00 level might function as robust support, given its past behavior.

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2024-12-19 15:12