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Can Bitcoin stay above $20k after Jackson Hole?

For much of this year, Bitcoin has moved in lock-step with broader risk sentiment.

With US stocks falling in recent sessions, so too has Bitcoin fallen, taking the shine off its summer rally.

Can Bitcoin stay above $20k after Jackson Hole?

Having breached the $25k line in mid-August, Bitcoin was then resisted at its 100-day simple moving average (SMA), going on to fall by as much as 17.6% over the past week and has now faltered below its 50-day SMA.

At the time of writing, the world’s largest cryptocurrency also eased below the psychologically-important US$21,000 mark.

Perhaps of more concern for Bitcoin bulls is the formation of a lower-low, which could signal that the summer uptrend has run its course.

Also, astute technical traders would have paid heed to the MACD crossing over into negative territory last week.

 

Cryptos remain beholden to Fed’s latest policy clues

Risk assets, including cryptos, may face a challenging climate in the lead up to the keenly-watched Jackson Hole Economic Symposium, to be held August 25th – 27th.

And Fed Chair Jerome Powell’s scheduled speech on Friday is set to hog the limelight.

Market participants around the world will be eager for the latest policy clues out of the world’s most influential central bank.

As things stand, markets are forecasting a 70% chance that the Fed will trigger a 75-basis point hike at its September meeting, which would mark its third consecutive supersized hike (having already triggered 75bps hikes at each of its past two policy meetings).

Also, markets predict that the ongoing Fed rate hike cycle will max out at 3.75% by March 2023, from the current 2.50% at present, before policymakers start to walk back from its ultra-aggressive, inflation-fighting stance.

Should Powell signal that more needs to be done to quell the fastest US inflation in 40 years, that could prompt more immediate declines for risk assets, including cryptos. That may even be the catalyst for sub-$20k Bitcoin.

However, if markets perceive that the Fed can begin easing away from supersized hikes over the coming meetings, and perhaps be content with mere 50bps hikes or even smaller for the upcoming meetings, that could jolt risk appetite and restore risk assets to recent heights.

In such a scenario, Bitcoin bulls would be chomping at the bit for another attempt to break above its 100-day SMA which currently resides around the $24k mark.

 

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