Bitcoin attempts recovery after rate hike scare. Should you buy it?
Bitcoin recovered 1.58% on Thursday after the rate-hike drop
Bitcoin remains vulnerable as long as macro-issues do not abate
$19,250 is a level to watch on Bitcoin as it recovers
Bitcoin BTC/USD is one of the highly watched cryptocurrencies during interest rate decisions. That’s because the cryptocurrency has exhibited correlations with equities. Thus, when interest decisions come up, equities and Bitcoin become focal points.
On Wednesday, the Federal Reserve announced a 75-basis point interest rate hike. The market had anticipated a similar hike in magnitude. Bitcoin fell below $19,000 immediately after the rate decision but recovered quickly. As of press time, the cryptocurrency was trading at $19,166 after adding more than 1.50% in 24 hours. The swift recovery indicates that markets had priced for a 75 basis point hike. Does that suggest Bitcoin will continue rising?
Looking ahead, the US central bank will hike rates further to end the year at around 4.4%. Fed Chair Jerome Powell did not rule out the possibility of a recession. The gloomy macro-outlook makes risky assets, including Bitcoin, unattractive.
Bitcoin is recovering but faces resistance at $19,250
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Applying the MACD indicator, Bitcoin’s momentum weakened after the Fed rate hike. The MACD line entered deeper into the bear zone as the price lost an important $19,250 support. At the current level, BTC trades at or slightly below the support, having hit the lowest since June. The level is also below its average for the past 50 days.
From the technical outlook, BTC has to successfully reclaim the $19,250 level to consider a potential upside. The cryptocurrency is not a recommended buy at the moment, especially in the short term.
Bitcoin could slip further if it fails to reclaim the $19,250 level. The macro factors and technical outlook sound bearish despite the latest recoveries. A recovery above the $19,250 invalidates a bearish view.
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