This is why the price of Bitcoin lost all the gains of the previous day


On December 14, the price of Bitcoin (BTC) reached no longer than one month and experienced a brief revival bullish momentumhowever, the Federal Reserve’s Federal Open Market Committee (FOMC) report and Fed Chairman Jerome Powell’s comments pushed BTC to an intraday low of $17,659.

Stocks and Bitcoin started the day slightly higher, but quickly pulled back on the FOMC report. To date, the price of Bitcoin remains closely linked to equities, and most investors are concerned about the impact of further interest rate hikes in the future.

BTC Correlation with Dow Jones and S&P 500. TradingView

Rising interest rates and aggressive statements from Powell are influencing the price of BTC

Although the Consumer Price Index report (IPC) showed that inflation fell to 7.1%, Powell still wants to achieve 2% headline inflation. Inflation has been the key driver of interest rate hikes, and the current 0.5% increase was the consensus among FOMC participants. Fed members also agree that rate hikes should continue until 2023.

FOMC study on future interest rate hikes. Source: Federal Reserve

During December 14 At the press conference, Powell stated:

“We may see higher rates over a longer period to meet the 2% inflation target”

This aggressive tone, along with the FOMC survey, suggests that interest rates will continue to rise for the foreseeable future.

What will Bitcoin do next?

Bitcoin’s short-term rally prior to Powell’s speech was linked to price movements seen in other risk assets. After the FOMC and Powell’s speech, these assets continued to retreat, and some analysts see recent decline as a buy metric more Bitcoins.

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Correlation of risk assets. Source: Delphi Digital

If the price of BTC continues to decline, the late bids of the current rally may be at risk of being sold out. According to derivatives data, Bitcoin open interest shows 60.16% of traders are long.

Bitcoin long to short ratio. Source: Coinglass

The market is currently absorbing the views expressed by the FOMC and Powell, so an increase in volatility in the short term is not unusual. Investors should watch the upcoming daily closes to see if the Bitcoin macro trend has changed.

The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading step involves risk, so readers should do their own research before making a decision.

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Source: news.google.com

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