Here is why Bitcoin price gave back all its intraday gains

On Dec. 14, Bitcoin (BTC) terms deed a 1-month high and saw a little resurgence successful bullish momentum, but the Federal Reserve’s Federal Open Market Committee (FOMC) hawkish study and comments from Fed seat Jerome Powell sent BTC to an intraday debased astatine $17,659. 

Stocks and Bitcoin started the time somewhat up but rapidly retracted connected the FOMC report. To date, Bitcoin terms remains intimately correlated to equities and a bulk of investors person concerns astir the interaction of further complaint increases successful the future.

BTC correlation to Dow Jones and S&P 500. TradingView

Rising involvement rates and hawkish speech from Powell interaction BTC price

While the Consumer Price Index (CPI) study showed easing ostentation astatine 7.1%, Powell inactive wants to scope 2% wide inflation. Inflation has been a determining origin successful raising involvement rates and the existent 0.5% hike had statement amongst FOMC participants. The Fed members besides hold that complaint hikes should proceed successful 2023.

FOMC survey for aboriginal involvement complaint hikes. Source: Federal Reserve

During the Dec. 14 property conference, Powell stated:

“We whitethorn spot higher rates for a longer play to execute the 2% ostentation goal”

This hawkish tone, combined with the FOMC survey shows involvement rates volition proceed to emergence for the foreseeable future.

What volition Bitcoin bash next?

The short-lived Bitcoin rally up of Powell’s code correlated to the terms enactment seen crossed different hazard assets. After the FOMC and Powell’s speech, these assets continued to retrace and immoderate analysts spot the recent dip arsenic a metric to buy much Bitcoin.

Risk plus correlation. Source: Delphi Digital

Late longs to the existent rally could besides beryllium astatine hazard of liquidation if BTC terms continues to retrace. According to derivatives data, Bitcoin unfastened involvement shows 60.16% of traders are long.

Bitcoin agelong versus abbreviated ratio. Source: Coinglass

Currently, the marketplace is digesting the views expressed by the FOMC and Powell, truthful a spike successful short-term volatility is not abnormal. Investors should support an oculus connected the adjacent fewer regular closes to spot whether Bitcoin’s macro inclination has changed.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.