Bitcoin (BTC) analysts were eager to draw new price targets on August 27 after the largest cryptocurrency briefly dipped below $20,000.
BTC price targets below $20,000 remain in place
Data from Cointelegraph Markets Pro and TradingView show that the BTC/USD pair hit $19,945 on Bitstamp overnight following hawkish comments from the US Federal Reserve.
The pair extended intraday losses by around 9% and US equities fell on the prospect of inflationary policy, which appears to be increasingly abandoning the ‘soft landing’ scenario.
“Re-establishing price stability will take some time and will require sharp use of our tools to better balance supply and demand. A prolonged period of below-trend growth will likely be needed to reduce inflation,” Fed Chairman Jerome Powell said in a speech at the annual Jackson Hole Economic Symposium.
“Also, labor market conditions are likely to ease. While rising interest rates, slow growth and easing labor market conditions will reduce inflation, they will also be painful for households and businesses. These are the unfortunate costs of reducing inflation. But if we fail to restore price stability, the pain will be much greater. »
Adding that quantitative tightening, known as QT (quantitative tightening), could continue “for some time,” Powell prompted a significant spike in volatility among riskier assets.
Just wasted 10 minutes of my life watching Powell say a bunch of nothing
— Will Clemente (@WClementeIII) August 26, 2022
I just spent 10 minutes of my life watching Powell say a bunch of nothing. — Will Clemente (@WClementeIII) August 26, 2022.
As reported by Cointelegraph, US stocks lost a total of $1.25 trillion in a single session – more than the entire cryptocurrency market capitalization.
Bitcoin managed to regain $20,000 on the day, and was hovering around $20,200 at the time of writing, but still close to 1 month.
For traders, it was now a relief bounce and there could be even deeper losses.
“$BTC fell more than expected, but the idea remains the same. First up to liquidate late short positions, and then down,” the popular Twitter account Il Capo of Crypto told his followers in the first of several updates for the day.
Il Capo of Crypto went on to noticed that the short-term targets were between $23,000 and $23,500, but on the downside, $19,000 and $16,000 were now in place.
$BTC manual thinking
Resistance: 22500 and 23000. Expect a bounce to one of these levels for a short squeeze. That would also trap ships again, since it would be an aggressive movement.
Support: $19k. Break below here and it goes straight to the new levels.
Main goal: $16k pic.twitter.com/wFbVvBmHYO
— il Capo Of Crypto (@CryptoCapo_) August 27, 2022
$BTC Main Idea Resistance: 22500 and 23000. A bounce towards one of these levels is expected for a short squeeze. This would also capture long positions as this would be an aggressive move. Bracket: $19,000. If we go below this level, we will go straight to the new levels. Main goal: $16,000 pic.twitter.com/wFbVvBmHYO — il Capo Of Crypto (@CryptoCapo_) August 27, 2022.
Others have considered the potential for accumulation growing of BTC if the $20,000 support was breached again.
Another account, TraderSZ, respect that $19,400 was a potential rebound zone in such a correction, with a bounce up to the weekly opening near $23,000 before the June $17,600 return to the chart.
Meanwhile, the major trends from previous bull markets were once again above the BTC/USD pair. These include price realization at $21,600 and the 200-week moving average (MA) near $23,000.
“Moving resistance above $21,100. Support at $19,850 followed by $19,200,” it said added the Decenttrader trading series as part of a summary of the current situation.
DXY wakes up at the last minute on Fed signals
As stocks fell, the familiar face of the US dollar returned to tap the cryptocurrency markets.
Also Read: CME Bitcoin Futures Post Record Discount Amid ‘Very Bearish Sentiment’
The US Dollar Index (DXY), which first experienced a sharp decline, has rebounded to levels that put it back within 20-year highs.
At the close on August 26, the DXY was at just below 108.9, having dropped to 107.6 within hours.
“FED staying the course means $DXY maintains its trend, which means assets are declining more,” analyst Kevin Svenson summary.
“After waiting on the FED the course means that $DXY is maintaining its trend, which means that assets are more likely to fall,” he said. abstract analyst Kevin Svenson.
Meanwhile investor and entrepreneur Danny Baldus-Strauss drew the attention of his Twitter followers to the inverse correlation between DXY and BTC as a permanent indicator of highs and lows.
“If you are accumulating bitcoin in this bearish phase, keep an eye on $DXY. All the major lows in $BTC coincided with local highs in $DXY,” he said. Note next to a chart from the Stockmoney Lizards trading platform.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. All investment and trading involves risk. You should do your own research before making a decision.