This is a technical analysis post by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
The Fed has come and gone without moving the needle on bitcoins price in any meaningful way. The central bank cut interest rates by 25 basis points as expected, but reportedly delivered a hawkish outlook. Still, the dollar has been sold off.
Amidst all this, BTC continues to bore traders with its directionless price action.
The picture on the daily price chart is largely unchanged since pre-Fed, with prices still stuck in the countertrend mini-rising channel within the larger downtrend.
Any experienced technical trader will tell you that the playbook is simple now. If we break above the bearish trend line, it signals that the downtrend from the record high has ended. On the other hand, if we dip below the small ascending channel, it reinforces the broader downtrend, potentially leading to deeper losses.
Which way will it go? At the time of writing, the bull case looks appealing as the MACD histogram, with parameters set to (50,100,9) to measure medium to long term, is on the verge of crossing above zero (flashing green signal). Positive MACD crossovers indicate renewed bullish momentum.
The dollar index, one of BTC’s biggest nemesis, has taken a hit since the Fed meeting, undermining the central bank’s allegedly hawkish tone. DXY fell to 98.13 on Thursday, its lowest since Oct. 17 and was last seen at 98.36. A weaker dollar tends to bode well for risk assets, including cryptocurrencies.
More importantly, DXY’s MACD histogram has turned negative, indicating a bearish shift in momentum.
The Nasdaq has found its footing after the fall in November and is now trading above the commonly tracked 50-, 100-, and 200-day simple moving averages, offering bullish signals for the crypto market. Finally, BTC sellers appear to have run out of steam as prices continue to hold steady despite reports that the US Senate’s crypto market structure bull has hit a roadblock.
If BTC prices break out, several resistance levels between $97,000 and $108,000, identified by the 50-, 100-, and 200-day simple moving averages (SMA) and the Ichimoku Cloud, will come into focus.
That said, ETF flows remain a concern. As noted Thursday, there has not been a single day of net inflows above $500 million in the past month. While prices have stabilized since Nov. 20, cumulative net inflows since the last week of November amount to just $219 million, according to data from SoSoValue. That’s a paltry number compared to the billions in redemptions seen through October and early November.
While Nasdaq trading above its key averages is good news for BTC bulls, the cryptocurrency’s correlation with the tech index has become lopsided. Bitcoin falls more sharply when the Nasdaq falls, but rises only modestly on Nasdaq rallies.
So we cannot completely rule out a potential bear case in BTC involving a breakdown below the mini ascending channel. Such a move would reveal support around $80,000.
