Over the past 4 months, BTC has traded sideways. During this time, the coin tested the range above $45K just once, and it was an unsuccessful attempt. In the past 2 days, the cryptocurrency was able to touch the $43K mark and pull back due to mounting bearish pressure. The premier coin has already felt the consequences of the Fed's monetary policy decisions. The price encountered strong resistance at $43K, which is confirmed by the long upper shadow of the candlestick formed on April 21. Against the current backdrop, we may not expect the uptrend to resume any time soon.
In the wake of the rising correlation between bitcoin and stock indices like the NASDAQ, BTC buying activity decreased during the weekend when the equity market was closed. In addition, the US equity market went down last week with tech stocks and the NASDAQ suffering a major blow. It was all due to the Fed's new monetary policy stance.
Persistent inflation left the regulator no other choice but to raise interest rates, which, in turn, led to the strengthening of the dollar and boosted demand for government bonds. The market showed a strong reaction to a 2.909% rise in the yield on 10-year bonds on Thursday. The Fed's hawkish stance had a positive effect on government bonds and harmed risk assets, including bitcoin, which fell to $39K.
The yield on US bonds is currently higher than that of risk assets. However, they are safer financial instruments backed by the US. At the same time, the accumulation process of BTC coins goes on. Over the past month, the balance of Bitcoin on exchanges has fallen to a low, unseen for four years. Under current circumstances, active investing in bitcoin is justified in the long term.
Due to the high correlation with the NASDAQ, however, it is not the case in the short term. Central banks in Europe and Asia-Pacific have initiated the process of hiking rates as well, which makes active BTC/USD trading unprofitable. Daily and monthly trading volumes are falling for the same reason. Meanwhile, the HODL of Bitcoin in the long term is now seen as the only optimal strategy.
Bitcoin has fallen to the key support zone of $39K. The quote is likely to rebound from the level. Technical indicators signal bearish bias. The MACD is moving down below zero, showing a bearish impulse. The Stochastic and the RSI are leaving the bullish zone, which indicates the weakness of bulls and the lack of trading volumes. The asset is approaching the key area where the price may either go down to the range of $32K-$35K or return above $40K after a false breakout at $39K. Early on April 25, a bearish scenario seems more likely.
