Powell’s Influence on Bitcoin Halving

NOIDA (CoinChapter.com)—Federal Reserve Chair Jerome Powell’s influence on Bitcoin and the halving event coming up could have a ripple effect for investors. Powell has signaled that the policy-making body will likely maintain higher interest rates for longer than anticipated.

The halving event reduces the reward for mining new Bitcoin blocks by half, traditionally triggering a surge in Bitcoin’s price due to a decrease in supply. However, Powell’s commitment to high rates to combat persistent inflation poses a nuanced challenge to this expected bull run and Powell’s influence on the Bitcoin halving event may be felt in a multitude of ways.

Moreover, the general market consensus on Bitcoin price action post-halving remains milder than usual, owing to several bearish cues working against the token.

Interest Rates’ Influence on Bitcoin Halving

The Fed chair stated that the central bank could keep rates steady for “as long as needed.”

Higher interest rates benefit ‘safer‘ assets such as US Treasury bonds, attracting investors away from riskier assets like cryptocurrencies. With Powell indicating a continuation of high rates to address inflation concerns, the impact of the upcoming halving event could be muted.

The US economy’s robust performance, marked by strong job growth and retail sales, suggests it might withstand higher interest rates without significant downturns. As such, the previous predictions of three rate cuts in 2024 seem a distant dream now.

Powell Bitcoin Halving
BTC price drop after Powell’s announcement could be bad for Bitcoin halving impact.

The economic strength, however, complicates the Federal Reserve‘s approach to controlling inflation, potentially leading to a prolonged period of higher rates. For Bitcoin, this could mean a dampened halving effect as the general investment climate favors less volatile assets.

Furthermore, several experts, including Arthur Hayes, have warned of a negative price action following the Bitcoin halving. This could make traders more cautious before entering the market.

While Jerome Powell’s stance on maintaining the current interest rates might not ‘kill‘ the Bitcoin halving excitement, it certainly introduces complex dynamics into the market. The interplay between Federal Reserve policies and the Bitcoin halving event could cause investors to be cautious.

BTC Price Plummets Following Powell’s Announcement

Meanwhile, after Powell’s announcement, the BTC price dropped below $60,000 for the first time since Feb. 2024. The long lower wicks on the recent daily price candles highlight the presence of bulls in the market, yet the BTC price has not started a rally.

The price action suggests that traders wait for the halving event to impact the market before entering it. On April 17, BTC started the day positively. The token reached a high near $64,600 before plummeting nearly 8% following Powell’s rain on the Bitcoin halving parade.

Powell Bitcoin Halving
BTCUSD daily price chart with RSI. Source: Tradingview.com

The downtrend in BTC price is evidence of the impact of the Fed’s rate cut decision on the token’s price action. If Bitcoin price continues to decline, the token might drop to the 100-day EMA (blue wave) support near $58,000.

A breach of the immediate support level would mean Bitcoin price testing the support near $52,200 before recovering.

The RSI for Bitcoin remained comfortably neutral, at 39.39, leaving bulls plenty of room to rally before the momentum oscillator becomes overbought.

If traders can ignore Powell’s announcement and its potential impact on Bitcoin halving, the token will likely start rallying. In that context, the 20-day EMA (red wave) forms the first crucial resistance for the token near $66,300.

Breaking and consolidating above the immediate resistance could help BTC’s price rally to the resistance near $72,500.

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