Bitcoin dipped as much as 5% on Tuesday before recovering back above the support at $67,000. The cryptocurrency community is now keenly awaiting Federal Reserve Chairman Jerome Powell’s customary speech on Wednesday after the Federal Open Markets Committee (FOMC) meeting. The critical question remains: will Powell’s tone be dovish, potentially fueling a bounce in Bitcoin, or hawkish, which could suppress risk assets further?
At 2 pm ET, Federal Reserve Chairman Jerome Powell will deliver his customary speech at the end of the FOMC meeting. Market participants will closely analyze his statements, nuances, and delivery. The direction and flow of billions, if not trillions, of dollars will hinge on this speech.
With a rate cut or hike on Wednesday already ruled out by market predictions, the focus shifts to Powell’s tone. Will he set a dovish or hawkish tone for the market? Additionally, the Federal Reserve’s ‘dot plot,’ which outlines Fed officials’ expectations for future rate cuts, their sizes, and timings, will also be influential.
Bitcoin experienced a dip on Tuesday, but given that inflation data did not present any surprises, the impact was relatively contained. The BTC price dipped into the support band at $66,000 and bounced back, also finding support from the upward-sloping trend line, leading to a minor bounce today.
If Chairman Powell’s speech today is construed as ‘dovish’ by the market, Bitcoin could rise again and test the descending bull flag trend line at the $70,000 level. However, if Powell’s speech is ‘hawkish’ due to concerns over inflation, Bitcoin might break its support and descend to lower levels. While the hawkish scenario is considered less likely, it is crucial to prepare for both possibilities.