On June 13th, Bitcoin (BTC) returned above $26,000 as it tried to reclaim support after the daily close. Despite ongoing legal action in the United States and macroeconomic data releases, Bitcoin remained in a narrow range throughout the week. Traders, including Crypto Tony, warned of the potential risks of deep trades while noting the upside potential should the support flip occur. DecenTrader also flagged multiple resistance levels that BTC/USD needs to overcome. Funding rates were climbing, indicating a potential trend reversal already entering.
Optimism Amidst Market Uncertainty
BTC/USD still held trend lines that could be cause for optimism, according to other traders, including Moustache and Michaël van de Poppe, founder and CEO of trading firm Eight. Specifically, the 21-week and 200-week exponential moving averages (EMAs) held strong. However, Van de Poppe commented that the upcoming days would ultimately determine whether this trend could sustain or if BTC/USD would continue its downwards slope.
Market Uncertainty Surrounding Interest Rate Changes
Macroeconomic data prints for the week centered on the Consumer Price Index (CPI) due on June 13th, just a day before the Federal Reserve announced interest rate changes. The Fed is expected to pause interest rate hikes, which would follow ten consecutive hikes and mark a long-awaited turning point in policy. While a potential boon for risk assets, including crypto, not everyone was upbeat about the impact of a rates freeze. Analytics account The Long View wrote in part of its latest Twitter commentary that the Fed would likely still sound hawkish, but the more important question is if they will hold rates where they are (effectively tightening policy) if inflation falls further. Market odds of a freeze stood at around 75% at the time of writing, according to CME Group’s FedWatch Tool. The Long View also noted that if the Fed starts to cut rates like past cycles, they will be helping to reignite rate sensitive sectors, effectively undermining the work they have done.
Bitcoin continues to struggle amidst market uncertainty and resistance levels. While some traders remain optimistic about the trend lines holding strong, others are cautious about the potential impact of the Federal Reserve’s interest rate changes.