Bitcoin Price: Here's Why a Bullish Breakout is Imminent

Summary:

Bitcoin price is on a consolidation pattern after plunging in the previous session. After the kneejerk reaction, it is likely to breakout on the upside.

Bitcoin price is on a consolidation pattern after its decline in the previous session. On Wednesday, the crypto plunged by about 5.71% as a reaction to the Fed interest rate decision. The central bank drastically raised its expectations on inflation, after maintaining that the price pressures are transitory in its previous meeting.

While it left interest rates unchanged, it has made an upward shift on the timeline of rate hikes. Indeed, the Federal Open Market Committee (FOMC) projects two rate hikes by the end of the 2023. For now, the central bank is committed to its asset purchasing program.

The consolidation of Bitcoin price is a sign of the fading kneejerk reaction. On the broader picture, Fed’s assertions on the steadily recovering economy will be a bullish catalyst for the crypto.

A reduction in the US unemployment rate and overall recovery of the economy will heighten individuals’ spending power. With Bitcoin growing into one of the most popular investment options, the entry of more buyers will push the price higher. According to the Bank of America, Bitcoin’s long position is the second most crowded trade after commodities.

Bitcoin price technical outlook

Bitcoin price is on a consolidation pattern after dropping by 5.71% in the previous session. On a two-hour chart, it is finding resistance along the 50-day EMA. However, it remains below the 25-day EMA. At the time of writing, it was up by 0.9% at 38,817.1.

I expect the crypto to trade within a tight range before the entry of more buyers can trigger a bullish breakout past the psychological level of 40,000. The upper and lower borders of the horizontal channel will likely be at 39,270.5 and 38,112.1 respectively. Notably, a move below 38,000 will invalidate this thesis.