Fed Policy and Inflation Anxieties Slump Bitcoin and Broad Market

Bitcoin and the overall cryptocurrency market acceded to investors’ reaction toward Federal financial policy as the global monetary market witnessed inflation worries.

  • Thursday sessions saw Bitcoin on a sudden 7.9% drop as speculations about a 70bp rate increase and inflation worries hit the cryptocurrency world.
  • Powell’s confirmation on Wednesday could not offer more comfort since the relief rally of Wednesday.
  • BTC’s technical indicators flash bearishness, with Bitcoin hovering beneath the 50-day Exponential Moving Average.

The market response to Wednesday’s Fed Chair and Federal reserve guidance was short-lived. BTC dropped 7.9% yesterday to reverse Wednesday’s 5.18% surge, ending the day near $36,547. The bellwether crypto touched the $35,617-day low before securing late support.

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Meanwhile, the NASDAQ 100 – Bitcoin correlation bolstered further, confirming Fed’s impact on cryptocurrencies.

BTC Fear and Greed Index Reverses

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The Fear and Greed Index dropped to 22/100 from 27/100 in response to Bitcoin’s slump. That Index dipped into the Extreme Fear level, indicating investors worry about more dips. On 5 April, the Index touched a 53/100 month high, matching the assets $47,000 revisit. However, yesterday’s plummet witnessed Bitcoin declining under the $37,727 April low.

For now, the Index should surge past 46/100 to support a bullish uptick towards April’s peak at $47,433. A shift in market attitude towards Fed policy and inflation would back breakouts.

BTC Correlation with NASDAQ Strengthens

Thursday’s trading sessions saw the Bitcoin – NASDAQ 100 correlation strengthening further. On Wednesday, Powel sounded dovish as the Chai eased the tension by alleviating expectations about an aggressive policy normalization path.

Nevertheless, the narrative shifted yesterday, with market players worrying about stiffer moves to curb escalating inflation. Actions around BTC and NASDAQ matched again, with investors betting on a 75bp hike next month (June). That has the NASDAQ 100 slumping by 4.99%.

BTC Price Action and Technical Indicators

While writing this blog, Bitcoin traded with a 0.09% gain to $36,580. The crypto should reclaim the day’s pivot at $37,322 to climb towards the first massive resistance at $39,023. Broad market backing is essential to support an upsurge beyond $38,500.

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Extended upswings could see BTC testing the $40,000 resistance. The 2nd crucial resistance area stands at $41,538. Failure to recapture the pivot area will bring the initial support ($34,842) into play. Weakness can see BTC at the second crucial support at $33,123.

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