Bitcoin inched lower on Thursday despite the Federal Reserve’s dovish policy for the struggling US economy.
The benchmark cryptocurrency plunged towards $10,700 after a sell-off pushed the price lower below $11,000, a substantial technical support level per chartists. The dropdown itself came after a modest price rally earlier this week, wherein Bitcoin broke above a tiring trading range of $10,000-10,400 to hit a session high at $11,099.
The anticipation of an accommodative Fed policy raised bids for safe-haven assets, benefiting Bitcoin alongside. While the Fed committed to tolerating lower interest rates and higher inflation targets, its move failed to inspire traders in extending their long positions in the cryptocurrency market.
That should be due to a lack of clarity over how the Fed would achieve inflation above 2 percent. Investors recalled the Fed’s incapability of touching the benchmark since 2013 despite a prolonged quantitative easing program after the 2008 financial crisis.
A Wall Street Journal report by Greg Ip indicated that the FOMC statement was “strong on words but weak on actions.”
At the same time, Bitcoin also fell because it had already anticipated a bullish move at the beginning of this week. By the time Jay Powell, the Fed chairman, held a press conference to deliver the FOMC outlook, traders had secured their profits and were deciding to exit the market on short-term gains.
Bitcoin Technical Outlook
Market analyst CryptoHamster anticipated Bitcoin to continue its corrective moves downward in the coming sessions. He highlighted three technical indicators that pointed BTC/USD to lower levels ahead.
“Bitcoin on a daily time frame shows multiple bearish signals: TD Sequential green “9,” support/resistance flip, and hidden bearish divergences. It is better to wait for the daily candle close, but it might be a very nice short trade with a tight stop loss.”
Bitcoin Stock-to-Flow creator PlanB, on the other hand, focused on the fundamental aspects of the cryptocurrency’s next moves. He called out the US firm MicroStrategy for purchasing $425 million worth of BTC against the Fed’s dovish policies, adding that the company acquired those cryptos from weak hands and noobs.
“Why did the $425M MSTR buy not move Bitcoin price up,” said the on-chain analyst. “Because they bought carefully, thousands of small incognito [algorithm] orders over a period of weeks. Key thing: $425M is transferred from weak hands (shitcoiners, traders, noobs) to strong hands (hodl): reducing future sell pressure.”