How cryptocurrencies respond to the Fed statement

The Federal Reserve of the United States announced on this day that in March it will end its expansionary program for the purchase of Treasury bonds, ahead of schedule. Likewise, its directors unanimously agreed to raise interest rates in three tranches during 2022

In the previous to the Fed minutes, there were some analysts who thought that this Wednesday would put an end to the falls of cryptocurrencies, since there will be a movement “buy in the news”, beyond what the bank said Central America in its monetary policy decision. Others, on the other hand, believed that the confirmation by the Fed that it will accelerate the ‘tapering’ and bring the rate hikes closer to next year, will prolong the sharp correction in crypto assets.

Bitcoin, more than 30% below all-time highs, has had a tough time since the start of this week, when it plummeted to $ 45,670. Since then, it has been somewhat flat, trying to find support around $ 47,000, where “it has found a good waterline for the last couple of weeks, except for the sudden drop 10 days ago,” so this could be a key level for the cryptocurrency as it seeks to find its rhythm again, “said Craig Erlam, analyst at Oanda. On Tuesday it recovered the $ 48,000, where it continues this Wednesday.

“A flexible Federal Reserve could excite the crypto market, but it may be a lot to ask for given the levels of inflation we are seeing,” adds the expert.

Technical indicators play in favor of pessimists, since the formation of a pattern is sensed on the charts. “The current declines and the next consolidation could complete the right shoulder, with a neck at $ 41,500 and higher buying interest right at the $ 40,000 level,” they note in ‘CoinTelegraph’.

The data handled by Whalemap, which is defined as a transaction analysis account on the blockchain, also points to the $ 40,000 level as an area to watch closely.

“The problem in the short term is that anything can happen,” says José María Rodríguezm technical analyst at ‘Bolsamanía’. And he explains that “we have the king of cryptocurrencies in a nobody’s zone, halfway between the important support of US $ 40,000-US $ 41,500 (the minimums of September) and far from the resistance of the u $ s53,600 dollars and let’s not talk about the u $ s60,000 dollars ”. “In very short-term terms, it has support around the corner at last week’s lows ($ 47,215) and resistance at last week’s highs ($ 52,195),” he says.

However, other market observers suggested that, with the news from the Fed, traders would get carried away by buying in a “sell the rumor, buy the news” movement. At least in the short term, targeting $ 53,000 and clear resistance at $ 60,000.

However, it is difficult to bet that these increases, if they occur, will be more than a rebound after the falls, since a rise in rates and a faster-than-expected end to monetary injection policies could cause the market to turn around. bass player.

Ethereum at risk

As for the rest of the sector, there has been a purge in the main ‘altcoins’ that has affected ethereum. Cryptocurrency number two hit an all-time high of around $ 4,867 in early November, dropping nearly 20% a month later on rising profit-taking sentiment.

The lax monetary policy period after March 2020 has been instrumental in pushing the price of ether more than 3,330%. Therefore, the increasing likelihood of an acceleration in the reduction of stimuli may put the current rally and the bull market as a whole in the freezer, according to some analysts.

The price of $ 3,900, which has acted as a support for a long time, now stands as the first resistance to overcome for the rises to return. On the other hand, if the sales continue, the native unit of the Ethreum network could fall to US $ 3,250. Other experts are even more pessimistic, pointing to $ 2,800.