Summary

  • Bitcoin remains under pressure as hawkish Fed repricing, driven by Waller's comments and hotter than expected US CPI, weighed on the crypto market. A more dovish Fedspeak or a diplomatic breakthrough could trigger a relief rally, but the near-term outlook remains challenging.

Bitcoin has been mostly consolidating around recent lows as the hawkish repricing triggered by Fed governor Waller’s remarks and the hot US CPI weighed on the crypto market.

As a reminder, Fed’s Waller not only said he would support a rate hike in December regardless of the inflation data but also raised the possibility of a larger 50 bps move if inflation comes in hotter than expected.

Sure enough, the US CPI data came in above expectations and increased the probabilities of 50 bps hike. Following the CPI data, Fed's Hammack also left a door open for a larger rate increase. Traders are currently pricing in just a 12% probability of a 50 bps hike, but those odds could climb further if more Fed officials endorse the possibility or refrain from pushing back against it.

Meanwhile, US-Iran negotiations remain in a deadlock. The WSJ reported that US Vice President Vance is considering holding face-to-face talks with a senior Iranian security official in an attempt to bring the conflict to an end.

However, separate reports suggested that senior Iranian officials believe Washington is preparing either further military strikes or tighter economic pressure in an attempt to provoke a response from Tehran. There is clearly still a significant amount of mistrust between the two sides, reinforcing the view that a diplomatic breakthrough may not be as near as market expected.

Looking ahead, Bitcoin will likely remain under pressure amid the negative macro backdrop. A more dovish Fedspeak or a breakthrough in US-Iran negotiations, on the other hand, could trigger a relief rally.

BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can see that Bitcoin is approaching the major upward trendline. If the price gets there, we can expect the buyers to lean on the trendline, with a defined risk below it, to position for a rally into the 98,000 level, with the downward trendline as the first target. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 67,000 level next.

BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, we can see the price has been trading inside a small falling channel. The sellers will likely continue to lean on the top trendline, with a defined risk above it, to keep targeting a break below the major upward trendline. The buyers, on the other hand, will look for a break higher to pile in for a correction into the major downward trendline.

BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, there’s not much we can add here as the sellers will have a better risk to reward setup around the upper bound of the channel, while the buyers will look for a breakout or a rejection around the major upward trendline. The red lines define the average daily range for today.

UPCOMING CATALYSTS

Today we get the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PPI data.

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