Bitcoin gave up part of its weekly gains on Thursday as its price struggled to maintain a price floor above $11,000.
The BTC/USD exchange rate came crashing down from its intraday high at circa $11,099 owing to profit-taking behavior among daytraders. The pair formed a session low at $10,735, right above its technical support of $10,714, before attempting a modest rebound to the upside.
In the last couple of days, Bitcoin has failed to break out higher towards its year-to-date high near $12,500.
The cryptocurrency’s rally last week brought the price above the tiring $10,000-$10,400 range. But it has not been able to extend the upside sentiment anywhere above $11,000, signaling exhaustion near the top trading ranges.
That is despite a favorable macroeconomic climate. Bitcoin rose to $11,099 ahead of the Federal Open Market Committee’s September meeting on Wednesday, as BlocDesk covered earlier.
Nevertheless, after the Fed chairman Jerome Powell’s commitment to keeping interest rates near zero until 2023 and raising the inflation target above 2 percent, Bitcoin started correcting lower. It showed that traders were anticipating more clarity from the US central bank especially as doubts over its ability to achieve higher inflation loomed.
Kitco Metals senior analyst Jim Wyckoff noted similar downside movements in Gold, hedging that also rallied ahead of the FOMC meeting earlier this week. He said in a note:
“Many were hoping for more clarity on how the Fed plans to stoke inflation in the coming months,” he wrote, adding that “the FOMC statement and Chairman Jay Powell’s press conference were strong on words but weak on actions.”
Bitcoin Long-term Bullish
Bitcoin fell into the trap of interim macro uncertainty, so it appears. But that did not deviate the cryptocurrency from maintaining its upside bias, shows the chart below.
BTC/USD was trading higher inside an Ascending Channel pattern. So it appears, the pair’s uptrend slowed down upon testing the Channel’s upper trendline. As it did, Bitcoin’s likelihood of testing the Channel’s lower trendline increased.
If the cryptocurrency falls towards the greened support, then it could later undergo a retracement rally towards the Channel resistance all over again, this time the range a little higher than the previous time.
At the same time, an early bounce off the $10,714-support could lead the price higher above $11,000 all over again.
Daily price action has no influence on the Bitcoin’s long-term uptrend. The Fed’s dovish stance sooner or later will start reflecting on the cryptocurrency market.