Bitcoin price retreated: pattern points to a comeback

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  • The price of bitcoin declined after the Fed’s decision.

  • The Fed has decided to hike rates by 50 basis points.

  • An inverted head and shoulders pattern suggests more upside.

Bitcoin price pulled back on Thursday as the market reflected on the latest interest rate decision by the Federal Reserve. Bitcoin fell 4% to $17,673 after surging to $18,378 on Wednesday. It is still well above the year-to-date low of $15,470.

decline in central banks

BTC/USD, BTC/GBP, and BTC/EUR prices declined slightly as central banks started easing their policies. On Wednesday, the Federal Reserve decided to hike interest rates to 0.50%, down from the previous four hikes of 0.75%.

And on Thursday, other influential central banks decided to reduce the size of their rate hikes. In the UK, the Bank of England (BoE) decided to raise rates by 0.50%, down from a previous increase of 0.75%. The same happened in the European Union, where the European Central Bank (ECB) rose by 0.50%.

Federal Reserve decision

BitcoinThe main trigger was the Fed’s statement. In it, the bank sounded more bullish and hinted that it will continue hiking in 2023. Well, it guided that it would hike by 0.75% in 2023 before pausing.

As such, interest rates are likely to be hiked to 0.50% in February after 0.25% in March. Alternatively, it could deliver three 25 basis point increases, as we wrote in Article,

Still, I believe the Fed was concerned about falling bond yields and the signal they were sending. Bond yields and mortgage rates have been falling over the past few weeks. As such, the trend could push for more inflation in the coming months.

Bitcoin also reacted to the latest outflows from major exchanges, a sign that many investors are fearful of the industry. This is confirmed by the Fear and Greed Index, which has dropped to 24. Binance has seen an outflow of $5.2 billion in the last 7 days.

bitcoin price prediction

BTC/USD Chart by TradingView

The 4H chart shows that BTC price formed a bearish engulfing pattern on Wednesday. In price action analysis, this pattern is usually a bearish signal. A closer look reveals that the coin has formed an inverted head and shoulders pattern. The neckline of this pattern is $17,437.

Therefore, I suspect that bitcoin will form a break-and-retest pattern, which is a bullish signal. If this happens, it could resume the bullish trend as investors digest the latest decision. As such, the coin will likely rise to a high of $19,000.

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