"Investors got scared." What will happen to bitcoin in the next week
BitRiver Financial Analyst
In the period from December 5 to 11 the pair BTC/USDT traded in the price range of $16.7 thousand - $17.4 thousand. In the first half of the week bitcoin was under pressure, in the second half it went up. As bitcoin got back in touch with stock and currency markets, it was influenced by the dynamics of stock indices and dollar index.
On Monday, December 5, investors were spooked by better-than-expected data from the U.S. service sector. The statistics changed the market sentiments of the market participants as they still have concerns about the continuation of the Fed's tight policy to curb inflation. As a result, the S&P500 index was unable to break through the trend line on the daily and weekly section. The downward correction intensified amid closing long positions in technology sector stocks. The dollar index recovered to 105.79 points. The BTC/USDT pair returned to the level of $16.8 thousand.
On Tuesday, December 6, bitcoin rate consolidated at $17 thousand. On December 7, BTC/USDT pair went down to the trend line of $16.7 thousand amid the risk withdrawal. Since Thursday, December 8, the situation in the markets has changed. Bitcoin gained 2.30% against the dollar to $17.2 thousand. The dollar index reversed downward and the S&P500 index recovered to 3974 points. That was the end of the index rise, as well as the strengthening of bitcoin.
On Friday, December 9, the S&P500 index fell 0.73% to 3934.39 points. The sell-off in risky assets resumed after the release of disappointing U.S. producer price data for November. Prices rose more than forecasted. The PPI index in November rose by 7.4% year-on-year and by 0.3% relative to October. The average forecast was for the former index to rise 7.2% and the latter to rise 0.2%.
Fears of tighter monetary policy from the side of the FRS and possible recession came to the fore. U.S. stock futures changed from rising to falling, while Treasury yields jumped.
The statistics are rocking the markets ahead of the U.S. Federal Reserve's December 14 meeting. High volatility is needed for option sellers to sell them at a high premium. Investors are expecting Wednesday's rate hike of 50 basis points, to 4.5% per year. According to the latest CME FedWatch Tool, there is a 78.2% chance of a 50bp rate hike.
There is still uncertainty in the crypto market. The decline in the BTC/USDT pair on Friday was subdued. The level of $17.35K has not been passed, and the buyers can still pass it till Wednesday. The price pattern at 4H (time range on the chart) is favorable for an upward move.
Support is at the level of $16.9 thousand and the key level is at $16.5 thousand. We expect the solution after the speech of U.S. Federal Reserve Chairman Jerome Powell at the press conference to be held after the announcement of the rates decision.