Bitcoin price has risen after the announcement of US Federal Reserve Chairman Jerome Powell’s interest rate comments last week. Positive expectations for Bitcoin exchange-traded funds (ETFs) also continue to positively affect the price. So, what can be expected for Bitcoin, currently trading at $42,205, in the future?
Bitcoin price reached its highest level in 17 months, surpassing $41,400 at the start of the new week. Following this increase, gold, which reached a new record level on December 1, also followed the Bitcoin price increase. The common reason for this week’s rise in Bitcoin and gold prices could be the expectation of interest rate cuts. Investors have more confidence that the Fed will change interest rates after Jerome Powell’s speech on December 2.
The Fed Chairman had announced that they have increased interest rates enough to combat inflation. However, the markets emphasized that it is too early to speculate on when the tightening policy will ease, disregarding Powell’s words.
Interest rate cuts have been a factor that has frequently caused Bitcoin to rise in recent years. At the same time, low interest rates increase investors’ interest in riskier and less profitable assets such as gold, Bitcoin, and stocks. Bitcoin price continues to gain momentum with the increasing possibility of approval of the spot Bitcoin ETF application process in the US until January 2024.
The recent increase in Bitcoin’s price has caused a significant divergence with the daily relative strength index (RSI), indicating a slowdown in buying momentum at the highest levels of Bitcoin price. From a technical standpoint, a downward deviation could increase selling pressure. The selling risks seen in Bitcoin further increase near the 42,000 dollar level, which has turned from support to resistance near the 0.5 Fib line. With the combination of these bearish signals, there is a high possibility that Bitcoin price could drop to $35,780 by the end of December. The downward target intersects with Bitcoin’s 0.382 Fib level and the 50-day exponential moving average (red wave).