Bitcoin holds support – will Fed Chair Powell’s speech aid a bounce?

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As a seasoned crypto investor with a keen eye on market trends and Federal Reserve announcements, I’m keeping a close watch on Powell’s speech today. The impact of his words on Bitcoin and other risk assets can be significant, as we’ve seen in the past.

On Tuesday, Bitcoin experienced a decline of up to 5%, dropping below the $67,000 support level. However, it subsequently regained its footing and reclaimed this level. The upcoming speech by Federal Reserve Chairman Jerome Powell on Wednesday following the FOMC meeting is generating much anticipation. Will he adopt a dovish stance and potentially boost Bitcoin’s recovery or lean towards hawkishness, which could dampen risk assets?

Powell’s speech

At 2pm Eastern Time, Jerome Powell, the Federal Reserve Chairman, will make an appearance at the podium yet again to conclude the Federal Open Markets Committee (FOMC) meeting by giving his usual speech.

As a market analyst, I’ll be closely scrutinizing Fed Chairman Powell’s every word during his upcoming speech. His tone, inflection, and underlying meaning could potentially impact the movement of hundreds of billions, if not trillions of dollars in financial markets.

With no anticipated rate change from the Federal Reserve on Wednesday, my focus is on Powell’s tone in his speech. Will he sound dovish, signaling further monetary easing, or hawkish, suggesting a more aggressive stance on inflation? The market will react accordingly to these cues.

Another significant output from these gatherings is the Federal Reserve’s “dot plot” chart, indicating the projected number of rate adjustments, their magnitudes, and potential timelines suggested by Fed members.

As an analyst, I would describe it as follows: The market for risky assets remains unclear, and navigating through these murky waters is a challenge. Bitcoin experienced a minor setback on Tuesday, but fortunately, the inflation figures released did not spark any significant concern. Consequently, this dip in Bitcoin’s price did not create major disruptions to the broader market.

Bitcoin bounces from support

As a crypto investor, I’ve noticed that the bitcoin price dipped into its support zone, as indicated by the chart above. Following this trend, a rebound occurred around $66,000. Moreover, the upward-trending line on the chart acted as a safety net during today’s minor price recovery.

Dovish or hawkish?

If Chair Powell’s speech today is interpreted as indicating a more accommodative monetary policy stance by the financial markets, Bitcoin may surge and attempt to break through the downward sloping trendline at around $70,000.

If instead Powell expresses concerns about inflation in his speech, and it comes across as more aggressive or “hawkish,” then Bitcoin’s price could potentially lose its current support and fall to lower levels. This is less probable, but still a possibility that should be considered.

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2024-06-12 13:04