Bitcoin price briefly falls below $20K on ‘bunch of nothing’ Powell speech
Bitcoin could well sink below the $20,000 mark again, traders warn, with price targets now as low as $16,000.
Bitcoin (BTC) analysts were keen to draw fresh price targets on Aug. 27 after the largest cryptocurrency briefly fell below $20,000.
Sub-$20,000 BTC price targets stay in place
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $19,945 on Bitstamp the night after hawkish comments from the United States Federal Reserve.
Intraday losses for the pair neared 9% and United States equities cratered over the outlook for inflation policy, which looks to increasingly abandon the “soft landing” narrative.
“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth,” Fed Chair Jerome Powell said in a speech at the annual Jackson Hole Economic Symposium. He continued:
“Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
Adding that quantitative tightening could remain “for some time,” Powell sparked a major volatility spike to the downside across risk assets.
Just wasted 10 minutes of my life watching Powell say a bunch of nothing
— Will Clemente (@WClementeIII) August 26, 2022
As Cointelegraph reported, U.S. stocks lost a combined $1.25 trillion in a single session — more than the entire crypto market cap.
Bitcoin managed to surpass $20,000 on the day, and was hovering near $20,200 at the time of writing, but i nonetheless still near one-month lows.
For traders, it was now a question of a relief bounce followed — potentially — by even heavier losses.
“$BTC went lower than expected, but the idea is still the same. First up to liquidate late shorts, then down,” popular Twitter account Il Capo of Crypto told followers in the first of several updates on the day.
Il Capo of Crypto went on to paint short-term relief targets between $23,000 and $23,500, but to the downside, $19,000 and $16,000 were now in play.
$BTC main idea
Resistances: 22500 and 23000. Expecting a bounce to one of these levels for a short squeeze. That would also trap longs again, since it would be an aggressive move.
Support: $19k. Break below here and it goes straight to new lows.
Main target: $16k pic.twitter.com/wFbVvBmHYO
— il Capo Of Crypto (@CryptoCapo_) August 27, 2022
Others eyed the potential for increasing BTC accumulation should $20,000 be violated as support again.
Pseudonymous Twitte account TraderSZ considered $19,400 a potential bounce zone under such a correction, with relief running to the weekly open near $23,000 before June’s $17,600 reentered the picture.
Meanwhile, key trendlines figuring in prior bull markets were now back overhead for BTC/USD. These included the realized price at $21,600 and the 200-week moving average at close to $23,000.
“Moving higher resistance at $21,100. Support at $19850 followed by $19,200,” the Twitter account for trading suite Decentrader added in part of a summary of the current scenario.
DXY wakes up last minute on Fed cues
Meanwhile, as stocks tumbled, the familiar face of the U.S. dollar came back to haunt crypto markets.
Related: CME Bitcoin futures see record discount amid ‘very bearish sentiment’
The U.S. dollar index (DXY), initially seeing heavy downside, rebounded to levels which again put it within striking range of twenty-year highs.
At the end of Aug. 26, DXY stood around just under 108.9, up from lows of 107.6 within a matter of hours.
“FED staying the course means $DXY maintains its trend which means assets trend down more,” analyst Kevin Svenson summarized.
Investor and entrepreneur Danny Baldus-Strauss, meanwhile, pointed Twitter followers to the inverse correlation between DXY and BTC as an ongoing top and bottom indicator.
“If you’re accumulating Bitcoin in this bear, keep an eye on $DXY. All major bottoms in $BTC have coincided with local tops in $DXY,” he noted alongside a chart from trading platform Stockmoney Lizards.
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