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BTC Market Update & Powell's Speech Preview

Martin Walker
Oct 21, 2023 at 12:12 pm

Bitcoin (BTC), the renowned cryptocurrency, witnessed a slight dip, with its price falling to $29,786. This dip in value was held steady as it lingered around the $28,500 mark following the opening of the Wall Street market on October 19, just before an eagerly anticipated speech on the economic policies of the United States.

BTC/USD 1-hour chart. Source: TradingViewBTC/USD 1-hour chart. Source: TradingView 

Lepard suggests that Powell might adopt an exceptionally dovish stance

Lepard, an insightful commentator, suggested that there's a distinct possibility that Jerome Powell, the esteemed chair of the Federal Reserve, might lean towards a considerably more dovish stance. Notably, data from TradingView indicated that Bitcoin's price demonstrated an increasing resilience in anticipation of Powell's forthcoming remarks. Scheduled to address the Economic Club of New York at 12 pm Eastern Time on Thursday, Powell found himself navigating a rather intricate macroeconomic landscape, characterized by the 10-year United States bond yields reaching their loftiest levels since 2007.

With the looming specter of the 2008 Global Financial Crisis still etched in the minds of market participants, the central question at hand revolved around the tone of Powell's language—whether it would lean towards dovishness or hawkishness.

Lawrence "Larry" Lepard, a seasoned asset management expert, underscored the significance of the situation, stating, "They simply cannot allow the turbulence in the bond market to persist." He went on to add, "My prediction is that Powell is teetering on the edge of making a highly dovish move or statement, which has the potential to trigger a substantial upswing in the US bond market."

Recent data releases, indicating inflation surpassing expectations, had fueled the belief that the Federal Reserve was considering a protracted period of elevated interest rates.

Nevertheless, according to the latest data gleaned from CME Group's FedWatch Tool, there was a notable 88% likelihood that interest rates would remain at their current levels at the upcoming meeting of the Federal Open Market Committee (FOMC) on November 1, in stark contrast to a mere 11% probability of another interest rate hike.

Fed target rate probabilities chart. Source: CME GroupFed target rate probabilities chart. Source: CME Group 

Economist Mohamed El-Erian, during his appearance on CNBC's Squawk Box segment, offered an insightful perspective by suggesting that further interest rate hikes should be avoided—a prospect that would be considerably more favorable for risk assets, including the world of cryptocurrencies. In his words, "The message to convey right now is that the Fed has concluded its tightening phase; we're at the end of the road. However, whether Powell will ultimately deliver this message or not remains a topic of ongoing speculation."

Traders in the Bitcoin market keep a close eye on liquidity barriers

In the realm of the Bitcoin market, there was a sense of relative stability as it continued to trade within a range of substantial liquidity. 

Data from the on-chain monitoring source Material Indicators confirmed that the Binance order book displayed consistent levels of support and resistance, unaffected by the volatility that had characterized the beginning of the week.

BTC/USD order book data for Binance. Source: Material Indicators/XBTC/USD order book data for Binance. Source: Material Indicators/X 

In this environment, traders remained vigilant for potential breaches of more critical price levels. Among them, Crypto Tony identified the $28,000 and $29,000 thresholds as significant points of interest.

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