Crypto: Fed's Fight With Inflation May Lead To Decline Of Crypto Prices
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Bitcoin
Statements from members of the US Federal Reserve suggest they are leaning to support the third consecutive 75bp rate hike in September. They will not stop tightening until they are "fully convinced" that overheated inflation is falling, contributing to a marked decline in cryptocurrency prices.
Only during last Friday's session Bitcoin dropped by more than 10%, increasing the range lasting from August 15 this year depreciation to over 17%.
Such a significant sell-off caused Bitcoin to slide below the horizontal support of $ 22,500 and below the upward trend line, the lower limit observed since the mid-June parallel growth channel.
There was some upward rebound last weekend. Its dynamics, however, is so modest that this increase will probably not even exceed the previously defeated support (now resistance) of $ 22,500, after which the market will return to the downward path.
If this happens, the Bitcoin price could drop to $ 19,000, which would be the lowest since mid-July.
Considering the significant impact of the last week's statements of the Federal Reserve representatives on the BTC quotations, one can assume that an exhilarating month in the cryptocurrency market is ahead of us.
The annual symposium in Jackson Hole will take place this Thursday and Friday, during which (on Friday) the Fed president will deliver his speech. He may then provide some hints on the September meeting of the Federal Open Market Operations Committee (FOMC), during which a decision will be made on the scale of the following federal funds rate hike.
In addition, on September 2 and 13, 2022, we will get to know the latest reports on employment changes in the US non-agricultural sector (NFP) and consumer inflation (CPI) in the US, while the FOMC mentioned above meeting will be held on September 21 this year.
Ethereum
Looking at the Ethereum quotes, we can see that the price of this cryptocurrency has fallen by almost 25% in recent days, breaking the bottom of the upward wedge formation and sliding below the technical support of $ 1780.
This sell-off only stopped below $ 1,600, where there was a slight demand reaction last weekend, which could signal a potential for at least a corrective upward rebound towards $ 1,780.
However, it cannot be ruled out that the gains will not reach the recently defeated support (now the resistance), and the ETH rate will return to the downward path without any correction.
If this sale continues, the ETH rate could soon return to around $ 1,400 or even fall further to $ 1,250.
Litecoin
Litecoin's quotations have fallen by almost 20% recently, slipping below the technical support of $ 57.50 and breaking the bottom from the upward wedge pattern observed since mid-June this year.
The sell-off halted around $ 54 technical support, where a demand reaction surfaced last weekend, triggering an upward correction rebound towards $ 57.50.
We are currently seeing a test of this resistance. However, considering that this level coincides with the measurement of 38.2% Fibonacci retracement, it seems highly probable that its rejection could initiate another downward rally towards USD 47 or even USD 42.
