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After the significant success of last week, the cryptocurrency market and Bitcoin took a break and moved on to the consolidation phase. BTC quotes consolidated above $20k and tried to finally break through the level of the downward trend at $20.4k–$20.6k.
At the same time, there was a decline in trading activity and uncertainty in the stock market and the US dollar index. As a result, the markets fixed on their current positions before the Fed meeting, where many important points were made.
The markets were ready to raise the key rate by 75 basis points. The Fed's decision was built into the price of most assets, but this did not save cryptocurrencies from increased volatility. Powell's further statements have much more significance for the markets than the surge in trading activity.
Officials voted unanimously to raise the key rate by another 0.75%. Thus, the indicator reached the level of 4% and provoked anxiety in the markets because of the subsequent statements of the head of the Fed.
According to Chairman Jerome Powell, the final rate level will be higher than originally expected. The official noted that inflation is declining at a slow pace, and in order to prevent its fixation, it is necessary to maintain an aggressive monetary policy.
Powell made it clear to the markets that the Fed's policy will continue until a significant reduction in inflation. At the same time, the head of the department noted a significant slowdown in the US economy and a difficult macroeconomic situation.
With this in mind, officials discussed the possibility of slowing down rate hikes in December or February. This is a positive signal indicating that the peak point of the Fed's aggressive policy has been overcome. At the same time, it is important to understand that everything can change with negative inflation statistics.
The 0.75% rate hike was included in the price of the asset, but a certain part of the players took advantage of the volatility and arranged the removal of positions in both directions. With this, Bitcoin tested the $20.1k support zone and the $20.7k–$20.8k resistance area.
The BTC price moved from the $20.2k–$20.4k area in an upward direction, but there was a significant activation of sellers at $20.8k. As a result, the price went to retest the $20.1k support zone and held it.
Bitcoin completed the main task during a period of increased volatility - it held the $20k level. Technical metrics point to a retest of the $20.2k-$20.4k resistance zone. Stochastic and RSI started moving up after the bears failed to continue their advance below $20.4k.
Until the end of this week, the downtrend line at $20.4k will become the main point of attraction. The Fed meeting largely activated the sellers, and the bulls were forced to retreat for $20.4k. The main task of buyers in the current trading week will be to hold the $20k-$20.4k level.
With a bullish outcome and an increase in volumes on Monday, the chance of a retest of $20.8k will increase, and further movement towards the $20.8k-$21k zone. In a bearish scenario, the price will go to a support retest at $19.5k. Given the bullish period in the stock market, it is unlikely that BTC will update the local bottom in the first half of November.
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