Fed halts Bitcoin rebound but cryptocurrencies avoid another bloodbath
The cryptocurrency market is in the red yet again, as it turned lower on Wednesday and put the brakes on a promising three-day bullish rally following its rebound from the January 24th lows of $33,000 after the US Federal Reserve's (Fed) monetary policy decision and comments from its chairman, Jerome Powell. As expected, the world's largest central bank pointed to a rate hike in March and Powell gave a glimpse of his hawkish side by pointing to a rapid reduction of the Fed's balance sheet. However, experts explained that the declines are limited because much of the message was already discounted.
Bitcoin is down 4% in the last 24 hours, but manages to hold between $35,500 and $36,850, Wednesday's closing prices, so experts indicate that disaster has been averted in cryptoassets, as the price remains above the recent six-month floor and the $30,000 support is out of danger. As for other 'altcoins', Ethereum also respects $2,400 and keeps the $2,200 support intact, but declines are between 5% and 10% in the last 24 hours for most tokens, according to data from 'CoinMarketCap'. The total capitalization is $1.62 trillion.
It remains to be seen whether the rebound that originated on Monday fits the so-called 'dead cat bounce', whereby an asset receives a surge of buying after a significant plunge, but slows and then falls back further. In Bitcoin´s case, numerous analysts indicate that it is not entirely out of the woods, as more pain may be ahead "if risk appetite in general takes a hit," noted Craig Erlam, an analyst at Oanda. "Only time will tell if the crucial $30,000 region is tested, but traders will be very relieved by what they have seen this week," the expert added, as "Bitcoin's recovery over the past two days has been really encouraging after falling more than 50% from its all-time highs."
"The key test is above $40,000, the break that could accelerate the upward momentum," assured the Oanda expert. Technical analysis continues to indicate that the current move, that for now has a high at $38,800 could be framed as a 'pull back' to the former support zone and the current correction a halt on the way to this price level. "Let's see how Bitcoin behaves at the gates of the important resistance (formerly support) of $40,000," commented José María Rodríguez, analyst at Bolsamanía.
However, other indicators point to the persistence of bearish market sentiment, especially the Bitcoin fear and greed index, which continues to indicate extreme fear. However, during the up days, it has entered fear levels. In terms of short-term supports, Bitcoin may test $35,700 and $34,690.