Altcoins, Bitcoin, Cryptocurrency

Bitcoin’s $10,500 rejection had Investors attention diverted to the Federal Reserve’s Policy Meeting

Bitcoin closed last week with an abrupt leap above $10,500, a significant resistance target that triggered traders into booking their short-term profits.

The outcome was a dump. Bitcoin’s benchmark symbol BTC/USD hedged about $350 off its weekly top overnight. Moreover, the pair dropped into the same trading range that caught its breakout moves during this September. The new week’s technical outlook for BTC/USD continues the same as before: Swing inside the $9,800-$10,400 area.

Bitcoin rejects $10,500 to enter the past stabilization range.

Chart Source: TradingView

The co-founder of, Josh Rager, also noted the same in his weekly analysis. The analyst said BTC/USD should reclaim $11,900 to confirm its bullish bias.

Further Insights on Inflation

The Bitcoin market opened the new week in green, partially after finding modest technical support above $10,200 that caused an uptick in bullish trades. Simultaneously, the bounce-back after the $10,500-rejection also appeared ahead of the Federal Reserve’s policy meeting.

The central bank’s gathering expects to explain how it would put its fresh inflation targeting policy into action. There remains a lack of clarity after the Fed chair, Jerome Powell, committed to raising the inflation rate towards or above its benchmark target of 2 percent at the annual economic policy symposium held two weeks back.

Many analysts and investors, including Paul Tudor Jones, the Winklevoss Twins, and Jack Dorsey, believe higher inflation would push the Bitcoin price higher. To them, the scarce asset is a reliable measure of protection–a hedge–against purchasing power risk.

Nevertheless, BTC/USD remains to the downside even after the Fed’s inflationary outlook for the years ahead. The pair plunged by a maximum of 18.75 percent from its session top above $12,000. The downside move clarified that many daytraders remained skeptical for the short-term.

The reason could be the first significant correction in the US equity market since March 2020, especially in the tech stocks. The sell-off shifted investors back into the fiat market. Meanwhile, it woke the US dollar index from its two-year low, making other safe-haven assets–like Bitcoin and gold–cheaper.

Bitcoin’s Correction Risk

An interpretation of how the Fed plans to reach its inflation targets in the coming years could push Bitcoin higher. That would mean a retest of the $10,400-resistance followed by another extended move towards $10,500.

Nonetheless, if the central bank remains elusive at the September meeting, Bitcoin would take the chance to break below $10,000 to target $9,800 as its primary downside target. To make the matter worse, one economist sees no major announcement from the Fed this week.

Nomura’s Lewis Alexander said the Fed officials have not agreed on the timing of its forward guidance release, especially as the US economy shows signs of recovery after recording a decent growth in its manufacturing and labor sector.

Mr. Alexander said in a note,

“Recent comments from FOMC participants suggest a consensus for stronger, outcome-based forward guidance or significant changes to asset purchases remains some ways off,”

But if Bitcoin traders are watching closely, they could take some bullish cues off the Fed’s updated Summary of Economic Projections–aka “dot plot “–coming this week. There, the central bank would likely continue its zero-rate policy at least until 2022. Decreased rates lift the appeal of riskier assets.

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