Analyst says Bitcoin (BTC) is weakening but crypto markets may rally after Fed meeting this week
A well-known analyst ponders how the upcoming Federal Reserve meeting will affect both Bitcoin (BTC) and the broader economy.
The anonymous host of InvestAnswers first tells its 444,000 YouTube subscribers that all eyes will be on Wyoming Chair Jerome Powell during the Fed’s three-day retreat, noting that if interest rates don’t resume, markets are likely to rise climb.
“We really need to be aware that Jerome Powell is at the economics conference in Jackson Hole. He will provide the desired clarity about the market and the central bank’s course.
It’s probably the most important catalyst of the week for stocks and cryptos alike. Remember, if we get a hint of restraint, the market will recover.”
The analyst believes the Fed can only hike rates by a total of 1% or risk irreparably damaging the economy.
“The last time I read the Fed Minutes, there was so much wishy-washy stuff in them that it could basically be interpreted as the Fed going to slow rate hikes. But don’t get too excited. We are still in very restrictive territory.
But my thesis remains: there’s no more than 100 basis points left in the budget, and if that goes beyond that, it’s financial Armageddon.”
The InvestAnswers host next presents a Bitcoin channel chart dating back to mid-June. He watches as BTC trended up within the range until last week when it fell sharply and showed a double bottom.
“This is the channel you have watched many times over the past six weeks. From the bottom, in, out, beautiful range rider all the way to the top of the ascending channel.
We went nuts last week. I said it must support, if not it might be ugly. We broke through but dropped to a very interesting level. We had this visit over $25,000 and then straight down.
These are daily red candles and you can see the number of red days we’ve had. But what is very important is the support level around $20,750.”
Source: InvestAnswers/YouTube
The crypto guru notes that Bitcoin previously fell to around $20,750 four weeks ago, also revealing a double bottom. He is concerned that BTC could lose momentum after the rally that started in late July stalled on August 18.
“We’ve had this double bottom for the last five days. It matches the bottom we had about four or five weeks ago, which is a positive sign that this $20,000, $21,000 support level might hold.
But the momentum for Bitcoin is definitely slowing down right now, there is no doubt about that. We’re out of range. The question is what will happen now?
I expect we’ll likely be hacking sideways for the next week or so until we find out what the Fed is doing. And if they come out with bad news, it could go down to $20,000.”
At the time of writing, Bitcoin is trading evenly at $21,506.
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