This is a technical analysis post by CoinDesk analyst and chartered market technician Omkar Godbole.
The Federal Reserve has come and gone without moving the needle on bitcoin price in some significant way. The central bank cut rates by 25 basis points as expected, but reportedly provided more aggressive forward guidance. Still, the dollar has sold off.
Amid all this, BTC continues to bore traders with its directionless price action.
The outlook on the daily price chart remains largely unchanged from before the Fed, with prices still stuck in that mini-bullish countertrend channel within the larger downtrend.
Any experienced technical operator will tell you that the manual is simple now. If we break above the downtrend line, it indicates that the downtrend from the all-time high has ended. On the other hand, diving below the ascending mini-channel reinforces the broader downtrend, which could lead to deeper losses.
Where will it go? At the time of writing, the bullish case looks attractive as the MACD histogram, with parameters set at (50,100.9) to measure the medium to long term, is about to cross above zero (blinking green signal). Positive MACD crossovers indicate renewed bullish momentum.
The dollar index, one of BTC’s main enemies, has taken a hit since the Federal Reserve meeting, undermining the central bank’s supposedly hawkish tone. The DXY fell to 98.13 on Thursday, the lowest level since October 17 and was last seen at 98.36. A weaker dollar tends to bode well for risk assets, including cryptocurrencies.
More importantly, the MACD histogram of the DXY has turned negative, indicating a bearish shift in momentum.
Nasdaq has found its footing after the November crash and is now trading above the widely followed 50-day, 100-day, and 200-day simple moving averages, offering bullish signals for the crypto market. Lastly, BTC sellers appear to have run out of steam as prices continue to hold steady despite reports that the US Senate crypto market bullish structure has hit a roadblock.
If BTC prices break down, several resistance levels between $97,000 and $108,000 would be highlighted, identified by the 50-day, 100-day, and 200-day simple moving averages (SMA) and the Ichimoku cloud.
That said, ETF flows remain a cause for concern. As noted on Thursday, there has not been a single day of net inflows exceeding $500 million in the last month. While prices have stabilized since Nov. 20, cumulative net inflows since the last week of November amount to just $219 million, according to SoSoValue data. This is a paltry figure compared to the billions in refunds made through October and early November.
While the Nasdaq trading above its key averages is good news for BTC bulls, the cryptocurrency’s correlation with the tech index has become asymmetrical. Bitcoin falls more sharply when the Nasdaq declines, but rises only modestly on Nasdaq rallies.
Therefore, we cannot completely rule out a possible bearish case in BTC, involving a break below the ascending mini channel. Such a move would expose support around $80,000.
