Bitcoin plunged lower as traders waited for Federal Reserve Chairman Jerome Powell to deliver his keynote address at the annual Jackson Hole meeting starting later today.
The benchmark cryptocurrency plunged 0.82 percent–a modest dip–to trade near $11,369. The move downhill came a day after BTC/USD had climbed above the $11,500-mark. So it appears, traders used the local tops to secure short-term profits, thereby leading the pair to lower levels ahead of the New York trading session Thursday.
Bitcoin choppy ahead of Powell's speech. Source: TradingView.com
Inflation Woes
Much of uncertainty in the Bitcoin market appeared as traders remained divided over the outcome of Powell’s speech. Many expected the Fed chair to shed more light on the Fed’s views on inflation. Since 2012, the US central bank had maintained the consumer price index near 1.5 percent, which was way below its ideal target of 2 percent.
Economists now see Powell going ahead with a new formula called the “average inflation targeting.” The new policy framework will allow the Fed to push the inflation above or below 2 percent. That would push the prices of goods and services higher in the coming years.
It is one of the reasons why economists are uncertain about the policy, for the US politicians may speak against it, mainly ahead of the Presidential election in November 2020.
Bitcoin price has rallied by more than 200 percent since March 2020, after sensing that inflation would reduce the US dollar’s purchasing power. The same has caused havoc in the greenback’s market, the index of which earlier fell to its 27-month low against a basket of foreign currencies.
Global central banks, on the whole, had injected $70 trillion worth of liquidity into the markets since March 2020. That has majorly helped the safe-haven markets. Gold, for instance, logged a record high earlier this August – and is now trading 26 percent higher on a year-to-date timeframe.
More Bitcoin Plunge Expected
Michaël van de Poppe, a market analyst, envisioned Bitcoin in a bearish technical structure. He noted that the cryptocurrency could continue its corrective move further towards $11,000-$10,500 before it attempts a full-fledged pullback to the upside.
Bitcoin price targets presented by Michaël van de Poppe. Source: TradingView.com
“The primary scenario is getting a follow-through here,” said Poppe.
On larger timeframes, Bitcoin remains in a medium-term uptrend. The cryptocurrency so far has held $10,500 as a credible support level. Upon testing it again on the next dip, BTC/USD can attempt another run towards $12,000.
Powell is expected to speak at 0910 Eastern Time.