• The Federal Reserve of the United States (Fed) raised the funds rate this week, triggering a selloff in the US dollar.
• Bitcoin dropped against the dollar after trading above $24k for a brief period and is now sitting at the lower edge of a reversal pattern.
• Technical analysis suggests that investors should be cautious before shorting the market as BTC/USD is in a rising wedge formation.
The Federal Reserve Raises Funds Rate
The Federal Reserve of the United States (Fed) has raised the funds rate once more this week – this time, by 25bp. The decision triggered a selloff in the US dollar, which lost ground against its peer fiat currencies and Bitcoin as well.
Message from Fed
The message from the Fed was that disinflation in the United States had already begun, indicating that the fight against rising inflation appears to be over. As such, it approaches terminal rate for this tightening cycle.
US Dollar’s Strengthening
Despite initial weakness in response to Fed’s decision, investors decided it was time to buy US dollars and so it strengthened again after one day since then. This puts it in a range ahead of upcoming jobs report in US economy.
Bitcoin Drops Against Dollar
Bitcoin dropped against US dollar too after trading above $24k for some time and now sits dangerously at lower edge of reversal pattern according to technical analysis .
Advice from Technical Analysis
Technical analysis favors caution before shorting markets since BTC/USD is currently forming bearish divergence with oscillator RSI and rising wedge formation which are both indicators of potential market reversals.