Fed will react to inflation data on Wednesday - Bitcoin next move?

Table of Contents

• Fed between a rock and a hard place
• Bitcoin still within its bull flag
• Bitcoin support levels

As the US economy moves into even more uncertain times, the Federal Reserve’s upcoming reaction to poor inflation data will take place at Wednesday’s FOMC meeting. Interest rates are expected to remain where they are. Where does this leave bitcoin?

Fed between a rock and a hard place

PCE, PPI, and CPI inflation data are all rising, meaning that the Federal Reserve’s tightrope walk has become even more difficult. If inflation is about to raise its ugly head once more, and the US economy is about to enter recession, the Federal Reserve is very much stuck between a rock and a hard place.

Looser money policy is needed to help stave off the recession and provide fuel for the recovery, while at the same time, a reduction in rates is bound to throw fuel on the fire of inflation.

A no-win situation many would think. That said, with the US debt a towering inferno over the economy, inflation would help the US government to repay debt with cheaper dollars - which analysts call “inflating away the debt”. All good, unless you are the average US citizen who survives paycheck to paycheck, and who would have to take the brunt of such a scenario.

With the April jobs report being published this coming Friday, a storm may be whipped up that bitcoin and the crypto market will need to ride out. Could this force bitcoin to lose the all-important $59,000 support?

Bitcoin still within its bull flag

Source: Coingecko/TradingView

At least for now, $BTC is still trading sideways within its bull flag. The lower reaches of which coincide with the $59,000 support. A bounce would need to take place again at this level for $BTC to continue its bullish trajectory.

Bitcoin support levels

Source: Coingecko/TradingView

Zooming much further out into the weekly time frame, the band of support for $BTC can be clearly seen. If the band is broken downwards, the next level of support is at $55,000, then $51,000, and even down to $46,000. 

That said, if the price did come all the way back to $46,000, this could be seen as a very healthy move that could result in prolonging the bull market. Also, bullish divergence on the weekly time frame might also have something to say about the price.

Things may look bleak right now for bitcoin, but how much bleaker does it look for the dollar and government bonds? Bitcoin was built for this type of scenario, and those holding it might try and think what could the result be of selling $BTC into $USD?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.