Bitcoin (BTC) retreated and gave back its intraday gains after the Federal Reserve announced a third consecutive 75 basis point (bps) interest rate hike on September 21.
Traders sell news
BTC price is down about 6.5% from an intraday high of $19,950, injury $18,660 minutes after the Federal Open Market Committee statement. Its decline mirrored a similar sharp correction in the US stock market, with the benchmark S&P 500 down 0.5% after the Fed update.
On the other hand, the yield on the 10-year US Treasury note rose to 3.6%, versus 3.56% five minutes before the Fed’s announcement. Similarly, the yield on the 2-year Treasury note rose to 4% from 3.98% over the same period.
The US dollar index (DXY), which measures the greenback’s strength against a basket of top foreign currencies, rose to 111.57 for the first time in 20 years.
The Fed also released an updated “dot plot,” which adheres to its officials’ personal interest rate projections through the end of 2025. These forecasts indicate additional rate hikes in the future, with the 2022 target at 4.4% and the 2023 target at 4.6%. .
Central bank officials also predicted that the policy rate would peak at 4.6% in 2023. Then, it will drop to 3.9% in 2024, then further down to 2.9% in 2025.
All metrics point to more pain for Bitcoin
A rise in the dollar and a fall in bitcoin after the Fed update reflected investors Growing appetite for cash and cash-based instruments compared to riskier assets. Meanwhile, the central bank’s dot plot indicated that investor sentiment will remain unchanged until the end of 2023.
RELATED: Bitcoin ‘Nuclear’ Warnings Amid Fed Rate Hike Decision – Dollar Index Hits 20-Year High
Bitcoin price may suffer due to Fed’s hawkish stance and efforts to bring inflation down from current 8.3% level. Many analysts after the update of the central bank Note that That BTC price may break below the current technical support range of $18,000-$20,000, given that the Fed may raise rates by another 75 bps before the end of the year.
I really don’t know how much more this is $BTC Can hold support pic.twitter.com/YAdkkB9Zww
— CRG (@MacroCRG) September 20, 2022
Bitcoin’s technical outlook appears similarly bearish. Notably, the cryptocurrency is forming a bearish reversal pattern called a “head-and-shoulders.”,” with a profit target of around $14,000, as illustrated below.
Conversely, a rebound from the head-and-shoulders support level of $18,800 could eye Bitcoin as an interim upside target of $22,500.
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