Bitcoin (BTC) Hit Reverse in Response to Fed Chair Powell Testimony

Bob Mason

Wed, Jun 22, 2022, 7:45 PM 3 min read

Key Insights:

On Wednesday, bitcoin (BTC) slid by 3.60% to end the day at sub-$20,000 for the first time since Saturday’s sell-off.
Fed Chair Powell’s testimony on Capitol Hill hit riskier assets, with cryptos and crude reflecting investor fears of a US recession.
Technical indicators are bearish, with bitcoin sitting below the 50-day EMA.

On Wednesday, bitcoin (BTC) slid by 3.60%. Reversing a 0.72% gain from Tuesday, bitcoin ended the day at $19,954. Bitcoin last ended the day at sub-$20,000 on Saturday, June 18.

A recovery from sub-$20,000 saw bitcoin rise to an afternoon high of $20,863 before hitting reverse.

However, falling short of $21,000, bitcoin slid through the First Major Support Level at $20,127 to a low of $19,756.

Despite finding late support, the First Major Support Level pegged bitcoin back.

Risk aversion weighed on bitcoin and the global financial markets, with the NASDAQ 100 and WTI crude ending the day in the red.

At the time of writing, the NASDAQ 100 Mini was down 34.25 points, with risk aversion sending WTI down a further 2.07% to 103.99.

However, bitcoin continued to decouple from the NASDAQ 100 this morning, following Wednesday’s heavier losses. On Wednesday, the NASDAQ slipped by just 0.15%.

Bitcoin Fear & Greed Index Holds Steady Despite Powell Testimony

After recovering from sub-10/100 levels on Wednesday, the Fear & Greed Index held steady at 11/100 this morning.

Despite the hold, the Index remained deep in the “Extreme Fear” zone, reflective of headwinds that plague the crypto market.

Powell’s Wednesday testimony reaffirmed investor fears of a US recession, with the Fed Chair unable to assure a soft landing to the Fed’s policy plans to bring inflation back to target.

Bitcoin had found initial support in Powell’s comments that the Fed would consider incoming data and the economic outlook at each policy meeting. However, the relief was brief, with Powell highlighting the risks to the US economy.

Near term, market volatility will likely persist, with the markets needing to digest incoming data to assess the impact of the Fed’s rate hikes. However, patience is required, with inflation unlikely to slide back toward target any time soon.

Persistent inflation and deteriorating economic conditions are plausible outcomes that would further impact bitcoin and the broader market.