Bitcoin weekly: Powell throws an ice bucket
After a good start to the week, Fed chairman Powell came out to throw a bucket of ice at the party, cooling market expectations of further rate cuts. Bitcoin ended the week down, but still closed slightly above support at $109k, keeping the price target of $142k in play for now.
Also watch the accompanying chart analysis on YouTube.
The past week started out positive. Stock markets put in new all time highs, frontrunning US rate cuts, tech earnings, and good news coming out of Trump’s visit to Asia.
Then came Wednesday and the US rate cut announcement. As expected, the Fed’s FOMC decided to cut 25 bps. However, at the usual press conference after the announcement, chairman Powell did his best to drive home the message that a further cut in December is far from a foregone conclusion. In the Fed’s view, the US job market is holding up reasonably well after all, while the danger of higher inflation still looms.
This somewhat hawkish stance from Powell was not what the markets wanted to hear. They sold off towards the end of the week, adjusting to the prospects of slower than expected rate cuts. The disappointment was also reflected in the crypto space, which ended the week down across the board. Also, bitcoin ETF inflows turned negative again, showing that sentiment is still weak.
However, it’s probably a mistake to focus too much on the short term actions of the Fed right now. The fact is that the US economy is holding up, big tech earnings came in pretty good, and the US and China are apparently seeking to de-escalate their trade war. These are all fundamentally positive things, and until the charts actually start signalling tops, there is no reason to be bearish yet.
Bitcoin closed the week at $110.5k, down on the week. While it’s not great to see that week’s bounce selling off so soon, the week did close above support at $109k. So we’ll just have to wait and see where this week ends up closing. For now $109k is still support, and the price target of $142k from the breakout back in early July still remains.
Bitcoin dominance climbed slightly this week, ending the week right below 60%. It’s now coming up against both the 40 week EMA, and the level from which it broke down in early August. If the real downtrend has indeed started, it’s now entering the territory where we could expect it to turn down again. But until it actually turns around, altseason remains on pause.
That’s all for this week. Thanks for reading, and I’ll be back with a new update next Monday!
