Bitcoin (BTC) analysts were poised to set new price targets on August 27 after the largest cryptocurrency briefly dipped below $20,000.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
BTC price targets below $20,000 remain in place
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $19,945 on Bitstamp overnight after the US Federal Reserve comments.
Intraday losses for the pair approached 9% and US stocks sank on the outlook for inflation policy, which is increasingly seeking to abandon the “soft landing” narrative.
“Restoring price stability will take time and requires using our tools strongly to better balance supply and demand. Lowering inflation is likely to require a sustained period of below-trend growth,” he said. said the chairman of the Fed, Jerome Powell, in a speech at the annual economic symposium in Jackson Hole.
“Furthermore, some softening of labor market conditions is very likely. While higher interest rates, slower growth and softer labor market conditions will lower inflation, they will also they will cause some pain to households and businesses. These are the unfortunate costs of reducing inflation. But if price stability were not to be restored it would mean much greater pain.”
Adding that quantitative tightening, known as QT, could remain “for some time,” Powell sparked a significant increase in downside volatility in risk assets.
I just wasted 10 minutes of my life watching Powell say nothing
— Will Clemente (@WClementeIII) August 26, 2022
As Cointelegraph reported, US stocks lost a combined $1.25 trillion in a single session, more than the entire crypto market capitalization.
Bitcoin managed to recover $20,000 on the day and was near $20,200 at the time of writing, but still near one-month lows.
For traders, it was now a relief bounce followed by potentially even bigger losses.
“$BTC was lower than expected, but the idea remains the same. First to liquidate late shorts, then lower,” he told followers of the popular Il Capo de Crypto Twitter account in the first of several updates of the day.
Continuing, Il Capo de Crypto painted short-term relief targets between $23,000 and $23,500, but on the downside, $19,000 and $16,000 were now in play.
main idea of $BTC
Resistances: 22500 and 23000. A bounce to one of these levels is expected for a short squeeze. This would also trap the longs again as it would be an aggressive move.
Support: $19,000. It breaks out below and goes straight to new lows.
Main goal: $16,000 pic.twitter.com/wFbVvBmHYO
— il Capo Of Crypto (@CryptoCapo_) August 27, 2022
Others noted the potential to increase BTC accumulation should $20,000 be breached again as support.
Fellow TraderSZ saw $19,400 as a potential bounce zone under this correction, with relief coming to the weekly open near $23,000 before June’s $17,600 came back into the picture.
Meanwhile, key trend lines that featured in earlier bull markets were once again overloaded by BTC/USD. These include the realized price at $21,600 and the 200-week moving average (MA) near $23,000.
“Higher resistance move at $21,100. Support at $19,850 followed by $19,200,” trading suite Decentrader added in part of a summary of the current scenario.
DXY wakes up late on Fed cues
Meanwhile, as stocks fell, the familiar face of the US dollar came back to haunt crypto markets.
Related: CME Bitcoin Futures See Record Discount Amid ‘Very Bearish Sentiment’
The US Dollar Index (DXY), which initially experienced a sharp decline, rallied to levels that put it back within a striking range of twenty-year highs.
At the end of August 26, DXY was around 108.9, reaching lows of 107.6 in a matter of hours.
1 hour candlestick chart of US Dollar Index (DXY). Source: TradingView
“FED staying the course means $DXY is holding its trend, which means assets tend to go lower,” summarized analyst Kevin Svenson.
Meanwhile, investor and entrepreneur Danny Baldus-Strauss pointed Twitter followers to the inverse correlation between DXY and BTC as an ongoing top and bottom indicator.
“If you’re piling up Bitcoin in this bear, watch $DXY. All major $BTC funds have matched local $DXY highs,” he noted alongside a chart from trading platform Stockmoney Lizards.
Annotated Chart of the US Dollar Index (DXY) vs. BTC/USD. Source: Danny Baldus-Strauss/Twitter
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