Bitcoin price set to tank 10% as BTC traders fail to get Fed's memo
|- Bitcoin price jumped higher on Tuesday with the Powell speech as the catalyst.
- BTC currently is seeing some slim profit-taking as the jump stalls.
- Crypto traders need to stop chasing their tails and listen to what Powell says: more hikes mean more pain.
Bitcoin (BTC) price action was able to eke out over 2% gains on the back of Fed Chair Jerome Powell’s speech on Tuesday evening. In a bizarre twist, markets only focused on one sentence from Powell, which was that 2023 would be a disinflationary year. Only now are traders starting to read between the lines and realizing that there is a chance the Fed might keep hiking throughout 2023, which is a big game changer and means even more challenging trading conditions to come.
Bitcoin traders need to book their profits and head for the exit
Bitcoin price on Tuesday evening was a perfect example of how algos and the next dumb money is jacking up the price action in an often illogical way. The speech from Jerome Powell was just outright hawkish, but algos only picked one word, “disinflationary,” which triggered buy orders from the algos in the first minutes after the speech was published. Next, novice and retail traders saw the move and without question bought into the rally up to $23,257.
BTC currently sees price action going nowhere as several professional trading desks and hedge funds will use the elevated price action as an entry-level to run price action into the ground soon. Powell did not say inflation will get to 2% this year, rather the opposite, that it will take more hikes and longer before inflation will continue to slow down. With more hikes than anticipated, the financial conditions will be more bearish, trigger a stronger US Dollar, and at least rebalances Bitcoin price rather near $21,969.
BTC/USD daily chart
Upside potential would come if, finally, some follow-through gets activated, making a new intraday high in the coming hours. If the European session can not get that done, the US session could create a better moment to see an uptick toward $23,878. A break above looks doubtful as that would require a very outright bullish day, with both the European and the US sessions printing green numbers across the board.
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