- Bitcoin is at something of a make or break point, having just tapped an important area of resistance
- Bitcoin has rallied over $2,000 since hitting $15,500 at the end of November
- What it does next will shape the rest of the year and into early 2023
Bitcoin is at a make or break point having hit an area of resistance on the weekly timeframe, with today’s Federal Reserve being the catalyst that will dictate its next move, and potentially shape the rest of 2022 and early 2023. What could we see when the interest rate hike is announced?
Rally Hits First Resistance
Since rallying from the $15,500 region, Bitcoin has made its way up to the first area of real resistance:
This line was tapped after yesterday’s bounce, and what happens next is crucial. In a bear market that hasn’t yet reached its bottom, we might expect a rejection at this level followed by a return to the prior support, which then itself turns into resistance:
There is however a more bullish scenario which sees Bitcoin reclaiming the $19,000 level:
What matters here, and what will dictate the direction Bitcoin goes in, is fundamentals. The reason for Bitcoin’s jump yesterday was the more positive news about the Consumer Price Index (CPI), which suggested that rising prices of consumer goods may be slowing. Today we have the all-important interest rate decision by the Federal Reserve, which always has a bearing on stock markets and Bitcoin in the short term.
If the Federal Reserve raises interest rates at equal or below expectations, we could see Bitcoin leap this line of resistance and prepare for a next leg up. If, however, the Fed increases interest rates above what is expected, yesterday’s rally could be unwound instantly as investors fear further squeezing.
Whatever happens today with Bitcoin, the overall path seems rocky at best for the next 12-18 months, with only a close above $24,000 suggesting anything like a bull market can resume.
