After last week's strong rally, the world's largest cryptocurrency, Bitcoin (quotation BTC), failed to maintain the psychological resistance of $23.000. Over the past weekend, the price of BTC has come under some selling pressure and is currently trading at $22.858, with a market cap of $440 billion.
It seems that the Bitcoin bulls are waiting for Federal Reserve Chairman Jerome Powell's speech, scheduled for Tuesday, February 7th. The start of the earnings season was rather poor, and even the big tech companies failed to meet earnings estimates.
Therefore, if the Fed chairman hints at aggressive rate hikes later in the year, he could end the recent rally. Above $23.000, the next resistance for Bitcoin will be $25.000. To the downside, Bitcoin has a strong psychological support at $20.000.
After a brutal 2022, Bitcoin has rebounded more than 40% since the start of 2023. However, until there is more clarity in global markets, the price of BTC is likely to continue to fluctuate between 20.000 and $23.000.
Bitcoin and the US recession
Fears of an imminent US recession amid an aggressive Fed stance are on the rise. In his recent YouTube live stream, Michaël van de Poppe stated that there is a growing possibility that Bitcoin and other risk assets could see a bearish turn.
Poppe added that considering future Fed rate hikes, the US could "probably" head into a recession.
Much hinges on the January 23rd CPI data, arriving this month on February 14th. If the inflation slowdown is less than expected, the US dollar will strengthen again and stop the current market rally.
If the US were to enter a recession, it would be the first recession for Bitcoin and the broader cryptocurrency market. Therefore, it is difficult to predict how far BTC could be corrected in such a scenario. Comparing Bitcoin to the Nasdaq 100 index, Bloomberg senior macro strategist Mike McGlone explained that any dip below the 200-week moving average could lead to a 40-70% price correction.
The bullish case scenario for Bitcoin
However, other market analysts believe that Bitcoin is not likely to fall much and will find support on a higher low. Cryptocurrency and market education, analysis and forecasting tool, IncomeSharks, noted that:
Remember that most bulls are still holding and not selling. The bears are locked into cash. Slowly but surely the bears are buying and buying. The stubborn continue to sell short, driving prices up further.
