Introduction:
Bitcoin prices have been on a downward trend, facing their third week of losses as the Federal Reserve Chair Jerome Powell suggests that interest rates may continue to rise. This article discusses the fundamental and technical factors driving Bitcoin price action and the potential impact of rising interest rates on the cryptocurrency market.
Fundamental Factors Driving Price Action:
The semiannual monetary policy report has influenced market sentiment, as the Federal Reserve continues their congressional commentary leading up to the March FOMC meeting. Higher interest rates have a negative influence on risk assets like cryptocurrencies, which do not yield any interest from holding the coins/tokens. As a result, Bitcoin is facing pressure in the market.
Technical Factors Driving Price Action:
The Commodity Channel Index (CCI) falling into negative terrain suggests that Bitcoin may be oversold. However, prices hovering around the next level of psychological support around $22,000 could leave prices vulnerable to further declines. A break below this level could bring prices closer to the February low of $21,376 and even back into the $20k range. On the upside, a move above $22,000 and the September high could drive Bitcoin higher, bringing the next level of major resistance into light at $24,000.
FTX Contagion Impact:
The recent drop below the 50-day Moving Average (MA) and below the September high (at $22,781) has exacerbated the downward move for Bitcoin. Silvergate Capital is the latest victim of FTX contagion, which has negatively impacted the cryptocurrency market. As a result, Bitcoin prices are facing further downward pressure.
Conclusion:
Bitcoin prices are facing their third week of losses as interest rates continue to rise. Fundamental and technical factors have contributed to driving price action, with higher interest rates having a negative influence on risk assets like cryptocurrencies. While the CCI falling into negative terrain suggests that Bitcoin may be oversold, a break below $22,000 could leave prices vulnerable to further declines. On the upside, a move above $22,000 and the September high could drive Bitcoin higher, bringing the next level of major resistance into light at $24,000.
