February 2023, The Distributed, Stanko Illiev and Md Ishtiaque Ahmed
The U.S. Federal Reserve hiked the benchmark interest rate by 25 basis points this Wednesday, and it is essential to note that the federal funds rate is now in a range of 4.50% to 4.75%, which is the highest level since the 2007 year. Even though high-interest rates could harm the U.S. economy, sentiment-based indicators show that cryptocurrency investors are no longer panicking.
Fed Chair Jerome Powell said there is progress in the fight against inflation, and this message boosted equities and supported the cryptocurrency market. Because of Jerome Powell’s comments, investors hope that the Fed could put interest rate hikes on pause at their March meeting or even announce monetary easing.
At the same time, the U.S. economy showed that the jobs market remains strong, which pointed to the economy’s resilience in the face of aggressive policy tightening. The U.S. economy added 517,000 new jobs in January (expectations were 190,000 new jobs), while the unemployment rate trickled down to 3.4% in January, which is the best result in the last fifty-three years. Analytics firm Glassnode reported:
“Even if the Fed decides to take interest rates above 5.0% for the rest of this year, Bitcoin is unlikely to return to fresh cycle lows. One reason for this thinking is that a confluence of on-chain indicators are screaming that the bear market is over, most for the first time in a long-time.”
After testing the $22,500 support at the beginning of this trading week, Bitcoin advanced more than 7% in less than two days and jumped above the $24,000 level on Thursday. Since then, the price has made a minor retrace, and at press time, Bitcoin is hovering above the $23,000 mark on major spot exchanges.
Ethereum’s recent price surge is also connected with the general optimism in the cryptocurrency market. If the positive trend continues, the $1,800.00 resistance level could finally be tested in the coming days.
Technical Analysis of Bitcoin (BTC)
Key Findings: BTC Technical Analysis
- Despite macroeconomic challenges and mass profit-taking, Bitcoin’s price remains above $23,000.
- Bitcoin has capitulated, and bulls have contributed to the asset’s ability to hold above important psychological levels and support the bullish momentum.
- The 50 EMA already exceeded the 100 EMA, confirming an uptrend.
- BTC kept consolidating between $24,300 and $22,500 throughout last week, and a bearish breakout below this range may initiate a short-term bearish move next week.
- Bitcoin price may retrace near $20,000 before rejoining the bullish rally.
At the start of Wall Street trading on February 2, the pair had crossed the $24,000 mark for the second time, but buyers could not maintain momentum due to market instability.
Following the release of US Nonfarm Payrolls statistics, the price of bitcoin reversed course and began to rise. The asset maintained above the $23,000 critical psychological level. Long-term on-chain measures indicate that the price of Bitcoin will continue to rise.
The latest crossover between 50 and 100 EMA indicates BTC is still under an overall bullish trend. Although the negative MACD bars and the bearish crossover of its moving averages suggest a bearish momentum.
If Bitcoin fails to hold above $22,500, we may see the price pulling back near the psychological support at $20,000. Alternatively, a bullish move above the $22,500 level may lead Bitcoin to retest the $25,000 level.
Technical analysis of Ethereum (ETH)
Key Findings: ETH Technical Analysis
- Ethereum price is held below $1,700 despite the current bullish trend.
- However, the price still sustains above the 10 MA and already rejected the support near the $1,500 level, indicating a further bullish move next week.
- ETH may retest $1,300 and begin a downtrend movement if it fails to hold above $1,500.
- However, a move above $1,700 may push the price near the resistance at $1,800.
Ethereum (ETH) has advanced from $1,535.93 to $1,713,39 since the beginning of this trading week, and the current price stands at $1,649.61. The price continues to stay above the 10-day moving average, indicating that Ethereum (ETH) could advance even more in the upcoming days.
The important resistance level for Ethereum stands at $1,800.00, and if the price advances above this level, the next target could be $1,900.00 or even $2,000.00
Traders should also consider that the price of Ethereum is usually correlated with Bitcoin, and if the price of Bitcoin jumps above $25,000, we would probably see ETH at a higher price level than the current price. The strong support level stands at $1,500.00, and if the price breaks this level, we could see Ethereum at $1,300.00 or even below.
