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(Kitco News) – Financial markets fell under pressure on Wednesday after the latest wholesale inflation data came in hotter than expected, raising the prospect of additional interest rate hikes by the Federal Reserve, which continues to struggle to bring inflation down to its 2% target.
The likelihood of such a raise increased in the eyes of investors after the September Federal Open Market Committee meeting minutes were released, showing that a majority of Fed members in attendance agreed that one more interest rate hike would “likely be appropriate.”
After briefly sliding into the red near midday, stocks managed to overcome the noise and reversed higher, leading to a positive close for the S&P, Dow, and Nasdaq, which finished up 0.42%, 0.19%, and 0.71%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) faced selling pressure throughout the day, falling below support at $27,400 in the early morning hours and dipping to a two-week low of $26,525 in the afternoon before bulls pushed it back above support at $26,700.
BTC/USD Chart by TradingView
The early morning pullback resulted in “October Bitcoin futures prices [trading] weaker in early U.S. trading Wednesday,” according to Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: Kitco
“The bears have gained a bit of momentum at mid-week, as prices have penetrated on the downside an uptrend line drawn on the daily bar chart,” Wyckoff said. “Bulls need to step up and show fresh power soon in order to restart the price uptrend.”
According to MN Trading analyst Daan Foppen, the monthly chart for Bitcoin shows the top crypto is currently “trading right in the middle of two points of interest.”
BTC/USD 1-month chart. Source: MN Trading
“Above us, we have the optimal target for bulls, which is the monthly fair value gap, which begins around the $32K mark,” Foppen said. “However, on the downside, we have a set of equal lows, which could also be a clean draw on liquidity. So, what would be the logical target? I tend to say the latter one.”
He said it’s his view that Bitcoin will go lower rather than higher because “price is very likely to move from internal liquidity towards external liquidity and vice versa.”
BTC/USD 1-month chart. Source: MN Trading
“We are currently rejecting internal liquidity in the form of the monthly FVG [fair value gap], so for me, it makes the most sense to trade towards the equal lows over the upcoming period,” he said. “This would be invalidated if we had a convincing close above the mean threshold of the monthly FVG, that would be our first indication that price is likely to move higher.”
Foppen said when such a bias is created on the monthly timeframe, “we should look at the daily timeframe to see how price could trade towards our bias.”
BTC/USD 1-day chart. Source: MN Trading
“We can see that we are currently on the verge of losing a daily FVG,” he said. “This means that today’s daily close will be crucial. If we displace below the current FVG, it gets more and more likely that we are going to trade towards the lows.”
Foppen noted that the past two months have been dominated by sideways price action, and said that when looked at “from a value perspective, we can see that we have traded above the value area high.”
BTC/USD 4-hour chart. Source: MN Trading
“However, we can see that price is currently dropping back into the range of value,” he said. “When price gets accepted back into the range, it is likely to see a rotation towards the other side which is a nice confluence with our bias.”
Altcoins dive into the red
The vast majority of altcoins in the top 200 recorded losses on Wednesday as crypto traders moved to de-risk in the face of a declining BTC price.
Daily cryptocurrency market performance. Source: Coin360
Request (REQ) was the only gainer of note with an increase of 32.5%. Storj (STORJ) led the losers with a decline of 8.63%, followed by a loss of 7.16% for Centrifuge (CFG) and a 5.9% pullback for Stratis (STRAX).
The overall cryptocurrency market cap now stands at $1.05 trillion, and Bitcoin’s dominance rate is 49.8%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
Read More:Bitcoin falls to $26,700 as the Fed says another interest rate hike is ‘likely to be appropriate’
2023-10-11 21:01:00
