Bitcoin Price Sinks Below $26K Post Powell’s Jackson Hole Remarks

Bitcoin price dipped below the crucial level of $26,000 on Friday in the wake of hawkish comments by the US Federal Reserve Chair Jerome Powell. The digital asset has been trading sideways for the past few days amid economic uncertainty and a decline in risk appetite. Bitcoin’s total market capitalization has plunged further over the past day to $506 billion, while the total volume of BTC traded over the same period fell by more than 12%.

Fundamentals

Bitcoin price has posted significant losses over the past few weeks as economic jitters and a decline in risk appetite continue to weigh on crypto prices. The global cryptocurrency market has also been on a steep decline, with major altcoins, including Ethereum, falling to their lowest levels in months. The global crypto market cap has crashed to $1.05 trillion over the past 24 hours, while the total crypto market volume decreased by 13.39%. Bitcoin’s dominance has also declined over the same period.

The Crypto Fear and Greed Index, which measures the sentiment of the crypto market participants, has moved to a fear level of 34, hinting at a decline in risk appetite. As such, investors are likely to sell their crypto holdings irrationally, thus entering conservation mode.

The main catalyst behind this week’s cryptocurrency selloff is the hawkish comments by Federal Reserve Chair Jerome Powell. Speaking at the annual Jackson Hole symposium in Wyoming, Powell said that inflation was still too high despite progress, warning that further interest rate hikes could be yet to come. He noted that the Fed will remain vigilant as it contemplates its next moves, giving little indication that it’s ready to start soon. According to the CME FedWatch Tool, there is a 20% chance of the Fed hiking its interest rates in its next meeting in September.

“Although inflation has moved down from its peak — a welcome development — it remains too high… We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” Powell said.

Bitcoin Price Technical Analysis

Bitcoin price has been trading sideways for the past few days, moving between the tight range of $26,000 and $26,300. The digital currency has lost more than 11% in value in the month to date but remains 57.48% higher in the year to date. Bitcoin remains below the 50-day and 200-day exponential moving averages as seen on the daily chart.

Its Relative Strength Index (RSI) is in the oversold region at 25, indicating an increase in selling pressure, while the Moving Average Convergence Divergence (MACD) indicator remains in the red. The Bollinger Bands have widened, pointing to a higher volatility, making the asset riskier.

Therefore, the Bitcoin price is likely to continue falling in the short term as bulls struggle to gather momentum to push the price higher. As such, the next support levels to watch are $25,800 and $25,300. Conversely, a move above the 200-day EMA at $27,265.50 might pave the way for further gains.

BTC Price Chart