Bullish view
Bearish view
- Set a sell-stop at 28,100 and a take-profit at 27,000.
- Add a stop-loss at 30,000.
Bitcoin price drifted upwards in the American and Asian sessions as traders rushed to safety ahead of the FOMC decision. The BTC/USD pair rose to a high of 28,850, which was higher than this week’s low of 27,658.
BTC and stocks diverge
The financial market was characterized by higher volatility and weak stocks. In the American session, the Dow Jones and the tech-heavy Nasdaq 100 dropped by more than 1% while the VIX index jumped by more than 10%.
These assets crashed because of the performance of regional bank stocks. PacWest shares plunged by over 25%, bringing the three-month decline to over 75%. Similarly, Western Alliance Bancorp dropped by almost 10% while the SPDR Regional Bank ETF fell by over 6%. Most regional banks were in the red.
There are concerns that the regional bank crisis is not over since many banks are still losing deposits to their larger rivals. At the same time, there are concerns about the commercial real estate sector where valuations are bleeding.
There are two implications of these challenges. First, it means that the Federal Reserve will shift its policy to avoid more damage to the economy. The most recent minutes showed that officials deliberated on the need to leave rates unchanged during the last meeting.
Therefore, there is a possibility that the Fed will decide to leave rates unchanged on Wednesday. Alternatively, the FOMC will decide to increase rates and then point to a strategic pause. Besides, there are signs that the economy is slowing. On Tuesday, data showed that the number of job vacancies dropped to the lowest point since 2021.
Second, it is a positive thing for Bitcoin since it is considered a safe haven that is equivalent to digital gold. Gold has jumped this year and is approaching its all-time high even as the banking crisis continues.
BTC/USD technical analysis
The BTC/USD pair held quite well as American stocks retreated. On the 4H chart, the pair moved to the 25-day and 50-day moving averages. The Awesome Oscillator has turned green below the zero line while the MACD line has drifted downwards. It is also above last week’s low of 27,160.
Therefore, the pair will likely continue rising ahead of the Fed decision and as risks to the banking sector continue. If this happens, the pair will likely rise to the key resistance point at 30,500.
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