Bitcoin falls to $26,700 as the Fed says another interest rate hike is ‘likely to be appropriate’
Financial markets took a hit on Wednesday as the latest wholesale inflation data came in higher than expected, raising concerns about additional interest rate hikes by the Federal Reserve. The September Federal Open Market Committee meeting minutes revealed that a majority of Fed members agreed that another interest rate hike would likely be appropriate. Despite this news, stocks managed to overcome the negative sentiment and reversed higher, with the S&P, Dow, and Nasdaq closing up 0.42%, 0.19%, and 0.71%, respectively.
Bitcoin faced selling pressure throughout the day, falling below support at $27,400 and hitting a two-week low of $26,525 before recovering above support at $26,700. This price action caused October Bitcoin futures prices to weaken during early US trading. Technical analysts suggest that the bears have gained some momentum as Bitcoin prices breached an uptrend line on the daily bar chart. Bulls need to show fresh power in order to restart the price uptrend.
Analysts have differing views on the direction Bitcoin is likely to take. According to MN Trading analyst Daan Foppen, the monthly chart shows Bitcoin trading between two points of interest. Bulls are looking at the monthly fair value gap, which starts at around $32,000, as the optimal target. However, bears are focused on the set of equal lows, which could be a draw on liquidity. Foppen believes that Bitcoin is likely to go lower rather than higher, as price moves from internal liquidity towards external liquidity and vice versa.
On the daily timeframe, Bitcoin is on the verge of losing a daily fair value gap, which could indicate a move towards the lows. The past two months have seen sideways price action dominated by a drop back into the range of value. If price gets accepted back into this range, it is likely to see a rotation towards the other side, aligning with the bearish bias.
In addition to Bitcoin, the overall cryptocurrency market also experienced losses as traders de-risked in response to the declining BTC price. Most altcoins in the top 200 recorded losses, with Request (REQ) being the only gainer of note with a 32.5% increase. The overall cryptocurrency market cap stands at $1.05 trillion, with Bitcoin’s dominance rate at 49.8%.
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