Quiet Start For Bitcoin
It’s been a muted start to the year for Bitcoin traders with the market-leading cryptocurrency languishing around the 45515 level support for now, sitting on the 61.8% retracement from last year’s lows. Following a heavy correction over much of Q4, sales evened out across late December with BTC trading a range between 45515 and 52930. While MACD and RSI are both pointing higher here, bulls will need to see a sharp move back above the 52930 level to assuage near term bearish risks.
FOMC Minutes In Focus
The key focus this week is on the December FOMC minutes due later today. Bitcoin came under heavy selling pressure into the end of last year as Fed tightening expectations took centre stage. With inflation soaring and the labour market continuing to tighten, the market began adjusting higher its projections for Fed tightening over the coming year. The Fed itself upgraded its outlook and forecasts at the December FOMC, now projecting three hikes in 2022 up from two prior, along with an earlier end to QE.
March Rate Hike Chances
The focus on today’s minutes release is likely to concern the extent to which the Fed discussed a quicker pace of tightening if necessary. Given the upgraded economic forecasts and dot plot forecasts, risks are skewed to the downside for BTC. Market pricing for a March hike has jumped to over 60% from around 25% ahead of the December meeting. If today’s minutes release shows that the Fed discussed potentially starting rate hikes in March, this will fuel an upward pricing in in US rates, weighing on BTC near term.
Big Bitcoin Moves to Come?
One particular point which is interesting to note here is that various exchange data is showing open interest in Bitcoin to be back at record highs, last seen when BTC hit all-time highs last year. However, with funding rates still around the neutral level currently many crypto data analysts are suggesting the current conditions are paving the way for a big move before the month’s end.
Technical Views
BTC
For now, BTC continues to hold along the support level at 45515, underpinned by the 61.8% retracement from 2021 lows. Given the sell off from last year’s highs, the focus remains on an eventual break lower unless we see a move back above the 52930 handle. Above there, and bulls are back in the driving seat with 57805 the next upside marker to note.To the downside, any break below the 45515 handle will turn focus to a test of 40990 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 70% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.