Bitcoin (BTC) ran out of steam near $23,000 on June 16 following the biggest US official interest rate hike in almost thirty years.
Dollar strength falters on news of rate hike
Data from Cointelegraph Markets Pro and TradingView showed the BTC/USD pair hit a high of $22,957 on Bitstamp after the Federal Reserve confirmed a 0.75% gain in June, the highest since 1994.
However, the momentum did not last long, and at press time, the pair had cleared $2,000 to return to $21,000 at the opening of Wall Street trading.
$BTC Did indeed fail to hold the mid range and fell back to the range low which it has held so far.
This range low is my line in the sand if BTC doesn’t want to revisit the lows and possibly test sub $20K levels.
Holding here and we can target the mid range (and higher) again. https://t.co/mFDHX0B57x pic.twitter.com/mEqOoGA9gK
— Daan Crypto Trades (@DaanCrypto) June 16, 2022
Popular Crypto trader Tony took notice of the US dollar following the Federal Reserve decision, and a turnaround in the strength of the US national currency is the key to a potential Bitcoin bottom.
The US dollar index (DXY), having reached a twenty-year high again after the announcement, started to pull back on June 16.
“Getting to a big dollar resistance zone, what if we can pull back from here and start to drop. Bitcoin bottom may be set soon,” said to his Twitter followers.
“However I am looking for a return to the highs before the drop, which coincides with another leg lower for BTC, so watch this.”
Veteran trader Peter Brandt, well known for his Bitcoin bottom predictions, meanwhile, said that seeing $20,000 again would not spark a true recovery, but rather a “relief rally.”
“Basically, the bear market is nowhere near over for crypto. I was expecting a good rally here, but the market may need a little more time,” added commentator Josh Rager in a tweet.
The cracks of the European Union and Japan appear
As the US market opened lower on the rebound from the Fed news, concerns about other global economies were just as high on the minds of many traders.
The European Union was facing a rally in Italian bonds, while in Japan, the weakness of the yen was becoming more worrying.
The idea of yield curve control needs to be retired. #Japan is breaking. pic.twitter.com/P4YL3kBLzS
— Ansel Lindner (@AnselLindner) June 16, 2022
Due to a combination of dollar strength and ongoing quantitative easing – not tightening – the USD/JPY pair hit its highest level since the late 1990s this week.
Arthur Hayes, former CEO of the derivatives platform BitMEX, has addressed the difficulties of both economies in blog posts on the future of Bitcoin in recent months.
For Hayes, the macro-economic turmoil that would ultimately cement Bitcoin’s status was already underway, but pain would precede any form of relief for the largest cryptocurrency and its investors.
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