BTC retrocede
Following a major rally to new all-time highs earlier this week, Bitcoin is now seeing fresh corrective activity. BTC futures are down around 10% from those highs and the leading cryptocurrency is currently on track to post its only consecutive daily loss since late February. This is the second such pullback for Bitcoin, which corrected lower by around 13% in early March. before recovering and trading at new highs.
The rebound of the dollar weighs on cryptocurrencies
The downward correction can be partly attributed to the current USD rebound and the broad correction we are seeing in risk markets. With the US dollar strengthening in response to higher than expected CPI and PPI, we are seeing broad risk aversion towards the end of the week. Given the rally we've had in BTC recently, there is plenty of room for the current correction to go a little deeper in the near term. However, with the upcoming halving event on the horizon, the outlook remains bullish for BTC in the medium term and the market is likely to resume the uptrend once late long positions have been eliminated.
The Fed in focus
In terms of how far the pullback can go, this will likely depend on how the USD recovery plays out. Next week's FOMC meeting will be a major focus for traders. In light of the strength of recent data we've seen, the Federal Reserve is expected to continue to downplay expectations of near-term rate cuts. However, as long as the Federal Reserve reaffirms its view that rate cuts are still forecast this year, this should be enough of a catalyst for cryptocurrencies to regain their composure on the upside.
Technical views
btc
The pullback from the highs has seen the market break through the lows of the bullish channel and the support level 69355. As we move back below this level, the focus is on a test of the 64540 level next in line with readings from bearish momentum studies. If we break below there, 59755 is the deepest support to watch.
