The passivity of cryptocurrency market participants over the past week was explained by high expectations from the results of the Fed meeting. And despite the controversial decisions, investors reacted positively to the decisions made. This was reflected in the quotes of bitcoin, which made an upward spurt within a few hours and consolidated above $ 48k. However, subsequently, the bulls failed to develop the advantage gained and the coin again declined to the local support zone of $48.8k.
Results of the Fed meeting
Recall that at the end of November, Fed Chairman Jerome Powell announced the need for an early reduction of the economic stimulus program in 2022. However, as expected, it was decided to accelerate the reduction of the program to $30 billion per month.
In the long run, this may play into the hands of the bears and provoke a sell-off of bitcoin. This is due to the fact that it was the rising inflation provoked by the stimulation of the economy that served as the BTC rally. This opinion was expressed by JPMorgan experts. A reduction in cash injections into the economy may provoke a sale of cryptocurrencies due to a decrease in its ability to protect against inflation.
Bitcoin has strengthened and.... everything
At the same time, the Fed made a positive decision and left the current rate unchanged. Due to this, the BTC/USD quotes strengthened by 4%, and the asset approached the psychological mark of $50k. However, attempts to gain a foothold above this milestone are still weak, as evidenced by the picture of the daily chart.
Firstly, we see that the asset is within the framework of a local downward trend, and bitcoin cannot break through the line of downward resistance. The bullish breakdown of this line is now a key factor in breaking out of the local bearish trend.
Now let's look at the state of bitcoin over the past three days and evaluate the chances (which are not at all) of a breakdown of the downward resistance line.
On the daily chart, we see that since the beginning of the flat movement (highlighted in red), sellers dominate, and buyers timidly try to absorb the offered volumes. This suggests that after the downward trend, we see a sideways movement with a slight advantage of the bears.
When analyzing the daily chart for the last three days (highlighted in yellow), you can notice the formation of a "bearish engulfing" pattern. At the same time, the bulls have not been able to absorb the volumes of a confident red candle for the third day in a row, which indicates a lack of activity on the part of the main audience. This is also a bearish sign, and therefore two scenarios should be considered.
What's next for BTC/USD?
I want to note right away that, in fact, both options are bullish and suggest going beyond the current range of fluctuations. With the first option, which I still find hard to believe, bulls continue to show passivity during the current week, and the $46k support zone remains untouched.
In this case, we are waiting for an exit to the top from the $46k-$49k area, followed by consolidation above $50k and continued growth to the levels of $52k-$54k. To work out this scenario, the cryptocurrency needs to hold the $46k level, and the whales need to increase the accumulation rate. I believe in this scenario the least because of a possible decline in the next day or two, provoked by an unsuccessful assault on $50k after the results of the Fed meeting.
Alternative option
The second scenario is more likely, but relevant for the next two days. Bitcoin unsuccessfully storms $50k (which we saw today) and moves to the lower border of the support zone and breaks through it. The breakdown is indicated by the fact that the bears have touched this mark twice in three days, and this time they will break it.
Subsequently, the price moves to the key resistance zone at $45.7k, breaks through it, and falls into the range of $45k-$42k, from where it impulsively recovers above $45k. In this case, we should expect a longer accumulation period due to the liquidation of a large number of longs. However, this scenario can be called "cleansing," since bitcoin will completely get rid of speculators before the birth of the final fifth wave of growth.
