Bitcoin bulls suffered another blow yesterday. The price is under renewed pressure as Fed Chair Powell dedicated a good part of his semiannual testimony to cryptocurrencies.
More precisely, during his remarks, he said that the market should expect a report on a digital dollar from the Fed as early as September. Moreover, he hinted that there is literally no need for any other cryptocurrency once a digital dollar would be in place. Furthermore, the role of the dollar as a world’s reserve currency is not threatened, according to Powell.
He also talked about stablecoins and the risk they pose to the financial system. More precisely, the Fed views stablecoins as money market funds, thus needed to be regulated.
Therefore, all the Fed’s remarks contributed to the bearish outlook seen recently on the cryptocurrency market. After China’s ban on cryptocurrency mining, the Fed’s message weighs on Bitcoin too.
As such, there is no surprise that the interest in the cryptocurrency market declined drastically. Bitcoin price dropped more than half from its 2021 highs and currently forms a descending triangle.
Bitcoin Technical Analysis
Bitcoin price consolidates in a tight range recently. Since the middle of May, the market found support at the $30,000 level, but every bounce so far fails to break the previous series lower highs.
Effectively, the pattern resembles a descending triangle, and the pressure now mounts for a bearish breakout. Only a move above $36,000 would invalidate the bearish scenario.
As such, bears may want to wait for a drop below $30,000 before going short with a stop at $36,000 and a target set by using a risk-reward ratio of 1:2 or more. If the Feds’ report on the digital dollar shows its imminent introduction, then the bearish pressure on the cryptocurrency market is likely to continue.
A move above $36,000 would lift the bearish sentiment as it suggests that the triangle acted as a reversal pattern.
Don’t miss a beat! Follow us on Telegram and Twitter.
Bitcoin Price Forecast
Follow Mircea on Twitter.