- Tezos price action flip-flopped on lower US inflation and investor enthusiasm.
- XTZ price is set to pop higher, but caution is still required.
- Expect to see a jump of 10%, as one FED member is signalling distress.
Tezos (XTZ) price is bouncing on the euphoria of Wednesday when US CPI dropped below estimates and came out lower-than-expected, which for once means good news. It suggests that households will see their living costs stabilising a bit after a steep decline lasting six months. Although this number is very supportive and has seen XTZ price rally 8% thus far, one Dovish Fed member said that the Bank is not done with raising rates at all and still needs to keep hiking them at an excruciating pace, which could spell trouble ahead for cryptocurrency traders if they do not watch out.
XTZ price rally to be handled with care
Tezos price is set to test and break above the monthly R1 resistance level at $1.96 despite already receiving a small rejection this morning. The level is becoming quite a hurdle for bulls, who were not able to break above it on August 8. The risk is that the R1 resistance could turn into a double top, capping price for the foreseeable future. Additionally, traders in any segment of the markets need to keep in mind the warnings that several Fed members issued afterward regarding what the Fed will do next.
XTZ price rallied on the back of downgraded rate hike expectations, with the next meeting in September only expected to yield a 50 bp rather than 75 bp rise. This opened the door for investors to jump on risk-on assets. Hours after the CPI print, however, a handful of Fed officials all came out in sync saying that the Fed is not done, with even a very dovish member repeating the same message. That counts as a big signal on the horizon that the rally in XTZ price might only reach $2.25 and then fall back once the Fed confirms it will still hike by 75bp – higher than current expectations.
XTZ/USD Daily chart
With this limited upside scenario in mind, a simple technical rejection has already been mentioned in the case of a double top forming against the monthly R1. In a bearish scenario, a fade could unfold, and – should price action break below the low of Wednesday – traders should expect to see a drop back to the monthly pivot in search of support. This might be found at around $1.64, or from the 55-day Simple Moving Average at $1.60.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
IRS says crypto staking should be taxed in response to lawsuit
The IRS stated that rewards from cryptocurrency staking are taxable upon receipt, according to a Bloomberg report on Monday, which stated the agency rejected a legal argument that sought to delay taxation until such rewards are sold or exchanged.
Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode
Solana is up 6% on Monday following a Glassnode report indicating that SOL has seen more capital increase than Bitcoin and Ethereum. Despite the large gains suggesting a relatively heated market, SOL could still stretch its growth before establishing a top for the cycle.
Ethereum Price Forecast: ETH risks a decline to $3,000 as investors realize increased profits and losses
Ethereum is up 4% on Monday despite increased selling pressure across long-term and short-term holders in the past two days. If whales fail to maintain their recent buy-the-dip attitude, ETH risks a decline below $3,000.
Crypto Today: BTC hits new Trump-era low as Chainlink, HBAR and AAVE lead market recovery
The global cryptocurrency market cap shrank by $500 billion after the Federal Reserve's hawkish statements on December 17. Amid the market crash, Bitcoin price declined 7.2% last week, recording its first weekly timeframe loss since Donald Trump’s re-election.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.