Decentral Block Post

Bitcoin (BTC) is struggling to stay above $23,000 as the weekend approaches. The selling pressure increased after the personal consumption expenditures excluding food and energy rose 0.6% in January and 4.7% over the year, above market expectations of an increase of 0.5% and 4.4% respectively. 

This could trigger fears that the United States Federal Reserve may have to continue its rate hikes to bring inflation under control. Expectations of a rate hike could strengthen the U.S. dollar index further, which is already near a seven-week high, and that may put pressure on the cryptocurrency markets in the near term.

A drop in the cryptocurrency markets may start a discussion that the rally in January may have been a bull trap. However, the price action in Bitcoin and several altcoins show that a bottoming formation may have begun. The next dip may form a higher low before attempting a move higher.

What are the important support levels in Bitcoin and altcoins? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Buyers successfully held the 20-day exponential moving average ($23,440) for the past two days but the failure to sustain the rebound attracted strong selling on Feb. 24.

Bitcoin (BTC) stayed lower at the Feb. 24 Wall Street open as United States macroeconomic data showed inflation biting back.

PCE sparks fresh doubts on inflation

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it traded in a narrowing range around $23,800.

The pair attempted to reclaim $24,500 the day prior, but it ultimately proved unsuccessful, as resistance kept gains in check.

Bitcoin nonetheless saw only a muted reaction to the latest U.S. Personal Consumption Expenditures (PCE) index print, which was 4.7% instead of the 4.3% forecast — suggesting that inflation was not ebbing as quickly as hoped.

For popular commentator Tedtalksmacro, this will cause the Federal Reserve to consider a larger interest rate hike at its March meeting — a potential headwind for risk assets including crypto.

It’s possible that many people have already forgotten that Bitcoin’s (BTC) price closed 2022 at $16,529 and the recent rebound and rejection at the $25,000 level could raise concern among certain investors. Bears are pushing back at the $25,000 level and there has been multiple failed attempts at the level between Feb. 16 and Feb. 21. Currently, it looks like the $23,500 resistance is continuing to gain strength with every retest. 

Pinpointing the rationale behind Bitcoin’s 45.5% year-to-date gain is not apparent, but part of it comes from the United States Federal Reserve’s inability to curb inflation while raising interest rates to its highest level in 15 years. The unintended consequence is higher government debt repayments and this adds further pressure to the budget deficit.

It’s virtually impossible to predict when the Fed will change its stance, but as the debt to gross domestic product ratio surpasses 128, it should not take longer than 18 months. At some point, the value of the U.S. dollar itself could become endangered due to extreme debt leverage.

On Feb. 23, the Fed, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a joint statement encouraging U.S. banks that rely on funding from the crypto sector to prevent liquidity runs by maintaining strong risk management practices. Regulators said the report was spurred by “recent events” in the industry due to increased volatility risks.

Let's look at derivatives metrics to better understand how professional traders are positioned in the current market conditions.