BTC, ETH could flush to next support levels post-FOMC meeting minutes

Global macro

Risky assets are trying to mount a short covering rebound in the Wednesday Asia afternoon (going into the London open) ahead of today’s highly anticipated FOMC at 2pm EST.  Anticipation is growing for an emergency Fed rate cut along with positive developments over US trading partners coming to an agreement with the Trump administration on lifting their tariffs and trade barriers.  US earnings releasing this week meanwhile are playing second fiddle to the global macro, geopolitical backdrop, with the Russia-Ukraine conflict further complicated by yesterday’s revelation that Chinese POWs have been captured (which suggests a potential widening of the war as opposed to a hopes for a ceasefire and peace treaty this year).  Returning to tariffs, China’s countermeasures in response to the US’ escalation have weighed on market sentiment, with expectations growing for a currency war as depreciation pressures weigh on the Yuan, which could lead other Asian regional exporters to following suit in weakening their currencies.  

Bitcoin

By shortly after the FOMC, to the relief of bulls or those playing a short-term bounce, BTCUSD should be approaching tentative support around the 38.2% Fib retrace of the massive December 2022 to January 2025 bull market (as can be seen in the weekly chart below) coinciding roughly with the highs of March and June 2024.  Regardless of the short covering that may begin in the next day or so, BTCUSD appears to want to slide further to an uptrend support connecting the October 2023, August 2024 and September 2024 lows (on the weekly chart) by May sometime.  A base, conservative scenario by year end is for BTCUSD to test the 50% Fib retrace of the late 2022-early 2025 bull market (coinciding roughly with the peaks of April and November 2021).  There is a medium to low probability for now of testing within the same period, the 61.8% Fib at just above the 2024 low of psychologically key 50k whole figure level.  Odds are moderate and rising for a multi-day to multi-week Dead Cat Bounce to begin as early as today 2pm EST with the release of the US FOMC meeting minutes, or by Thursday with the US CPI and unemployment claims, or Friday with the US PPI and preliminary UoM consumer sentiment and inflation expectations.

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