Bitcoin price recoils as hopes for a Santa rally fade
Bitcoin price has moved sideways in the past few weeks.
The Federal Reserve sounded more hawkish than expects.
It has formed a rising wedge pattern.
Bitcoin price continued recoiling on Monday as investors remained concerned about monetary policy and the crypto industry. The BTC coin was trading at $16,750, where it has been in the past few days. This price is a few points below last week’s high of $16,867.
Bitcoin price prediction: no Santa rally?
The BTC/USD price has continued consolidating in the past few weeks. After staging a comeback last week, the pair suffered a pullback as investors reflected on the latest Federal Reserve interest rate decision.
In its decision last week, the Fed decided to hike interest rates by 0.50% in its final decision of the year. It had previously increased rates by 75 basis points in the previous four monetary policy meeting. Also, the bank decided to continue with it quantitative tightening policy, as we wrote here.
The most important change was that the Fed would continue hiking rates in the coming months. That statement helped the market to change its view about monetary policy. Before the meeting, analysts were expecting that the central bank to sound a bit dovish since inflation has started cooling.
After the decision, American and global stocks collapsed while bond yields rose to their highest level in a few week. The US dollar index, which was recently falling, has made a strong recovery in the past few days.
The other main reason why Bitcoin price has been recoiling is the rising outflows from most exchanges. Binance, the biggest exchange in the world, has seen its outflows rise to more than $7.5 billion in the past 7 days. In the same period, Bitfinex has seen over $335 million in outflows while Crypto.com lost over $76 million.
Therefore, all these actions mean that the Santa rally has not happened.
Bitcoin price forecast
BTC/USD chart by TradingView
So, is it safe to buy Bitcoin? The BTC price has been in a tight range in the past few days. In this period, it has remained below the important resistance level at $16,867. It is also consolidating at the 25-day and 50-day moving averages.
At the same time, the Reltive Strength Index (RSI) has formed a bullish divergence pattern, which is a bullish sign. It has also formed a rising wedge, which is usually a bearish sign. Therefore, there is a likelihood that the coin will have a bearish breakout. If this happens, it could drop to $15,000.