Bitcoin (BTC) has dropped over 10% last week. This was the biggest price drop seen in two months. Analysts say the latest crash is linked to the Fed’s annual economic symposium, called Jackson Hole, which will take place on Friday. Accordingly, the concerns that emerged with the approach of the symposium enabled the bears to take control of the BTC price.
“Bitcoin may see these levels in the short term”
The minutes of the Fed’s July meeting have emerged. The minutes dealt a blow to hopes for a rate cut in 2023. As a result, Bitcoin saw selling pressure as it actively retreated. In the second largest crypto, events developed differently. As Cryptokoin.com reported, the news of Jump Crypto selling ETH encouraged profits in Ethereum price. According to observers, Bitcoin’s decline has broken the technical charts and reinvigorated the downtrend.
Trader and analyst Alex Kruger gave a statement to CoinDesk. Accordingly, last week’s bearish bears put Bitcoin in the driver’s seat. The market reversal will take some time and need good news. According to David Duong, head of institutional research at Coinbase, the daily technical chart of Bitcoin has turned bearish. So it is possible for BTC price to continue to lose ground in the short term. Duong said:
“BTC will likely retest support at $20,830 and $19,230 in the next few weeks.”
FED triggers price volatility
After last week’s Fed minutes, market expectations have changed. The market predicts that Powell will be on the hawk side during the Jackson Hole symposium. Symposium; It will host central bankers, finance ministers, academics and financial market participants. “FED Chairman Jerome Powell will probably emphasize that the tightening cycle is not over yet,” Duong said. Michael Kramer, founder of Mott Capital Management, wrote in a weekly market update:
“I would expect Powell to make it pretty clear that the pace of future rate hikes may slow, but they still have a lot to climb and they will remain hawks for a while.”
“The results of the Fed tightening will appear in 6 months”
The Fed said in July that it would be appropriate to slow tightening at some point. He also stated that it will trigger a relief rally in risky assets. However, Dan Peng, Vice President of Singapore-based digital asset management platform Metalpha, takes a different view. According to him, monetary policy works lagging. Therefore, the FED seems to stick to the hawk scenario for a while.
“The impact of higher interest rates on inflation will emerge in about six months,” Peng said. Then, “It is still too early to make any further calls for Bitcoin at this time.” he added. Conditions in nearly all US financial markets have been easing since mid-June. The Fed therefore has plenty of room to perpetuate the pro-tightening bias for a little while longer.
“Bitcoin bottom construction time will continue until this date”
Tighter economic conditions are seen as a sign of slowing growth. However, the opposite is also true. The tighter the conditions, the harder it is for the central bank to drain liquidity from the economy without curbing growth. Bitcoin’s short-term prospects are bleak. However, most of the downtrend has probably happened. Metalpha’s Peng said, “In the medium and long-term perspective, the current market is at the bottom of the Kitchin cycle and the bottom building process will repeat over the next few months.” said.
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