Investing.com – After hitting a new 2022 year low and also a two-year low around $15,600 yesterday, the market posted a sharp rebound, culminating last night on a high of $18,155 after rising more than 16% in just under 24 hours.
However, BTC then resumed its downward path overnight, and is hovering around the $17,000 threshold as of this writing on Friday morning.
Thus, as seen on the hourly chart below, Bitcoin’s rebound has so far only erased a quarter of the plunge posted between Sunday morning and Wednesday evening, and the cryptocurrency maintains a bearish profile that does not does not exclude a greater fall.
In the short term, the $17,000 zone should be considered as immediate support. Then the $16,250 zone will come into play, ahead of Wednesday’s low towards $15,600. Then, the threshold of $15,000 could be quickly targeted.
US Inflation Offers Bitcoin Respite
Regarding the reasons for yesterday’s rise, Bitcoin initially benefited from profit taking, but the rise was then sustained and accentuated by the positive surprise in the US CPI for the month of October.
Recall that the annual US CPI came out at 7.7%, against 8% expected and 8.2% previously, while the annual Core CPI, which excludes food and energy, stood at 6.3% against 6.5% anticipated and 6.5% previously.
This positive surprise on US inflation immediately led to a reassessment of market expectations in terms of a Fed rate hike. Indeed, at the time of writing this article, there is evidence of an 80.5% probability of seeing the Fed raise its rate by 0.5% in December, against 56.8% the day before.
Thus, the probability of seeing the Fed on the contrary proceed with a new rate hike of 0.75% fell to 19.4%, against 43.2% yesterday before the publication of the US CPI.
This reassessment of market expectations for a Fed rate hike is a big positive for Bitcoin, as has the Fed rate hike this year, and the consequent recessionary risks have been the main ones. reasons for the decline of digital assets in 2022.
FTX turmoil not over, Bitcoin falling to $13,000?
Finally, it will be recalled that the FTX affair, which caused a wave of panic on the cryptocurrency market this week, and which caused Bitcoin to plunge to a new annual low, is not over.
Investors are still waiting to hear if Crypto platform FTX and its sister investor firm Alameda Research will go bankrupt. The latest news is that Bahamian financial authorities have frozen the company’s funds, and there are even rumors that FTX boss Sam Bankman-Fried has been arrested.
Crypto investors will need to continue to monitor the development of this case and its contagion effects.
In this regard, it will be recalled that the bank JP Morgan wrote a note on Wednesday, warning that a “cascade of margin calls” is probably underway given the close links between the FTX platform and its sister trading company Alameda Research. and the rest of the crypto ecosystem.
“What makes this new phase of cryptocurrency divestiture driven by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with weak capital and high leverage is shrinking” in the crypto sphere, JPM pointed out.
The bank has not ruled out that Bitcoin could fall to $13,000, a price which according to it corresponds to the “production cost” of Bitcoin.