Bitcoin (BTC), the world’s largest cryptocurrency, has experienced a period of stability around the $26,000 mark following recent remarks by Federal Reserve Chairman Jerome Powell.
In his speech, Powell reiterated the central bank’s commitment to maintaining its 2% inflation target. As economists discuss the impact of this goal, market observers including Bloomberg senior macro strategist Mike McGlone weighed in on the potential impact of an impending recession on BTC prices.
Bearish outlook for Bitcoin?
In his speech, Chairman Powell stressed the importance of implementing "sufficiently restrictive" policies to address inflation-related issues. While economists continue to debate the merits of this approach, Powell's emphasis on controlling inflation has sparked speculation in the financial sector.
Bloomberg’s respected senior macro strategist Mike McGlone remains bullish on Bitcoin, often referred to as “digital gold.” However, McGlone predicts that Bitcoin prices could fall, saying that a “return to normalcy” during a recession could result in Bitcoin trading around $10,000 or even as low as $7,500.
McGlone acknowledged bitcoin’s volatility but highlighted its historical performance as an asset class, even during sharp declines.
Additionally, McGlone noted that Bitcoin’s 100-week moving average (MA) is currently trending down, indicating a negative market trend. The recent decline from the 2022 and 2023 bottoms further supports this observation.
Additionally, Powell mentioned that the Federal Reserve is in the process of raising interest rates, which has exacerbated concerns about Bitcoin’s macro outlook.
Nonetheless, comparing Bitcoin to the stock markets of 1921 and 1929, he believes that cryptocurrency is a revolutionary technology with the potential for long-term growth.
Adding to concerns about Bitcoin’s short-term growth, the U.S. Dollar Index (DXY) has been trending upward, thereby losing its previous correlation with Bitcoin, raising concerns about the market-leading cryptocurrency.
According to NewsBTC, the US dollar index is approaching important resistance levels in the near term. However, it is worth noting that favorable conditions, increased trading volume, and new liquidity entering the emerging cryptocurrency industry may provide Bitcoin with an opportunity to recover and reach higher price levels.
Currently, DXY is trading at 104.169 and is approaching two key resistance lines. The first resistance is located at 104.716 and the second resistance is located at 106. These levels have not been surpassed since May and March.
However, if DXY breaks above these resistance levels, it could push the index to higher levels, possibly reaching 112. Such a scenario could weigh on Bitcoin and disrupt its ongoing bullish trend, especially if favorable conditions and a positive correlation between the two assets do not exist.
Bitcoin is trading at $25,900, down slightly by 0.7% over the past 24 hours. However, as the market nears a new monthly close, Bitcoin bulls must reclaim the $26,000 threshold to prevent potential downside moves and further declines. #美联储是否加息？ #BTC #ETH