Bitcoin bears have gained control over the past few weeks, at least in the short term, and the battle seems to be on. After Bitcoin failed again at the USD 30,000 level on Sunday as part of a “weekend pump”, the bears are pushing towards USD 27,000.
At the time of writing, Bitcoin was hovering around $28,000, having already tested key support at $27,800 last night (EST). The long-term trend remains clearly in favor of the Bitcoin bulls, with a price above $25,000 speaking. However, in the near term, it is important to defend the USD 27,800 level to avoid a deeper correction towards USD 25,000, as also indicated by analyst XO.
$BTC pic.twitter.com/OKS791fYEi
— XO (@Trader_XO) May 1, 2023
Bitcoin remains in trading range
For technical analyst Michaël van de Poppe, founder of Eight Global, breaking $28,400 on the shorter time frame is the trend-setting price level. “If we break through $28.4K, we could be back to $30K in a few days. Don’t break and fold for the next few days, next $25K. Great volatility on the horizon,” warns the analyst.
However, the current weakness that Bitcoin is showing at around $28,000 could be an indication that another low is needed to generate new upside momentum. “I’m still looking at $27.8K for a potential long here, or a $28.4 break and flip for Bitcoin,” van de Poppe notes.
Yann Allemann and Jan Happel, co-founders of Glassnode, write in their latest analysis that Bitcoin’s monthly close in April was an important sign for the bulls. BTC closed green for the fourth consecutive month. According to the analysts, the short-term trading channel is between $27,000 – $29,200.
[B]but we are confident that we will have over $30,000 in no time. Our position strengthens the longer we stay above the highly active $28 – $28.2k level. Note the large horizontal bar.
All eyes on the Fed
Key to the price action in the coming weeks may be tomorrow’s FOMC meeting, Wednesday, and Fed Chairman Jerome Powell’s subsequent press conference. The market expects a final increase of 25 basis points. This brings the US benchmark interest rate to the same level as before the financial crisis in 2007.
However, the decision is probably already priced in. More important is the FOMC press conference at 2:30 p.m. EST, where Powell will provide his remarks for the coming months.
The market will hope for a comment from Powell that this was the last rate hike and that the first rate cuts will come later this year (very unlikely). The focus will also be on Powell’s comments on the banking crisis and how the credit crunch is intensifying.
Most likely, Powell will play on both sides, as he did at the March FOMC meeting. Comments such as “inflation is not yet where we want it to be”, “monitoring developments in the banking sector” and “data dependency” are all but guaranteed. On the bullish side, Powell could signal a pause in June and leave a door open for rate hikes if data allows.
Lol… tomorrow will be a volatile day and arguably a decisive trendsetter for the weeks to come. The beginning of a new #Bitcoin rally? https://t.co/Dd8FWOjsDa
— Jake Simmons (@realJakeSimmons) May 2, 2023
At the time of writing, Bitcoin was trading at $28,100, below the mid-range after once again rejecting the high range. Until the FOMC decision, it seems rather unlikely that BTC will make a major move unless there is another short or long squeeze due to the frenzy in the futures market. A recapture of the upper range would be a bullish sign as we head into the FOMC.
Featured image from iStock, chart from TradingView.com