The Bitcoin price rose to the highest level in more than a week as investors reacted to the decision by the Federal Reserve. The BTC coin rose to a high of $40,000, which is an important resistance level. The price was about 6.45% from the lowest level this month, bringing its total market cap to about $756 billion.
The Fed completed its meeting on Wednesday and did what most analysts were expecting. The officials decided to hike interest rates by 0.50%, which was the biggest hike in about 22 years. It was also the first time that the Fed has made back-to-back rate hikes. In justifying the rate hike, the Fed officials said that their goal was to slow the rising inflation. As such, they are now targeting a neutral rate of between 2% and 3%.
The BTC price is rising because the Fed rate hike was already baked-in by the market. As such, the scenario was like selling the rumours and then selling the news. There are also concerns that the bank will not even live to its word. Besides, this is the same Fed that was insisting on inflation being transitory. Also, there are initial signs that the economy is slowing.
Still, there is a likelihood that the Bitcoin price jump will be temporary. This is known as a dead cat bounce or a relied rally. For one, there is a common saying that advises investors avoid fighting the Federal Reserve. The argument is that since Bitcoin rose sharply during the easy-money era, the reversal will happen when tightening starts.
Bitcoin price prediction
The four-hour chart shows that the BTC price made a strong bullish trend this week. Along the way, the coin has moved slightly above the upper side of the descending channel shown in black. It has also moved slightly above the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) is approaching the overbought level.
Therefore, there is a likelihood that the coin will keep rising for a while and retest the support at $42,000. It will then retest the important support at $38,000.