While the “golden cross” pattern, considered technically positive in Bitcoin, proved valid only for a short time, the rapidly rising expectations of a Fed interest rate hike increased pressure on the cryptocurrency market.
Bitcoin (BTC) surged to $79,837 yesterday, causing the 50-day exponential moving average (EMA) on the daily chart to cross above the 200-day EMA. This formed a golden cross, a bullish signal in the market. However, BTC subsequently retreated to approximately $77,438, causing the 50-day EMA to fall back below the 200-day EMA, and the technical signal quickly lost its validity.
Bitcoin Pullback Following Inflation Data Release
The pullback in Bitcoin coincided with a period in which expectations regarding the Fed were sharply repriced following the release of US inflation data. The US core consumer price index (CPI) rose 0.3% on a monthly basis, exceeding market expectations of 0.2%. Following this, the probability of a 25 basis point interest rate hike by the Fed at its next meeting rose from approximately 69% after the CPI data to 86.5%, according to CME FedWatch data.
Rising expectations of interest rate hikes have put selling pressure on risky assets, including Bitcoin, giving back a significant portion of BTC’s previous gains.
However, technical indicators suggest that the medium-term outlook for Bitcoin has not completely turned negative. On the four-hour chart, the 50-period EMA is still above the 200-period EMA, and the golden cross pattern in this timeframe is maintained. The daily ADX indicator being at 45 also indicates that the current trend is relatively strong.
On the other hand, the decline of the four-hour RSI to 43.3 indicates a significant weakening of the short-term bullish momentum.
