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Bitcoin price retreats from $42,000 after Fed’s comment about hike interest rates

Bitcoin price has bounced off yesterday’s high of $42,965. According to several technical indicators, the cryptocurrency shows signs of improving momentum, which could support further gains towards $47,000-$50,000. At the time of writing, BTC is changing hands at $40,400.

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BTC/USD 4-hour chart | Source: TradingView

Bitcoin price rise loses steam after Fed comments

Bitcoin price had reached its highest price in 10 days, continuing its recovery from last week’s five-week low. A few hours ago, the leading cryptocurrency was up 1.1% in the past 24 hours to $41,498, putting more breathing room between the price and last week’s trading level, which was mostly below $40,000.

But after that, U.S. Federal Reserve Chair Jerome Powell said raising the benchmark U.S. interest rate by 50 basis points (0.5% point) “will be on the table” for the next Federal Open Markets Committee (FOMC) meeting in May in remarks at the International Monetary Fund debate. It was widely expected that there would be a 50 basis point rate hike in May or June to combat inflation.

The risk is that higher borrowing costs crimp spending and investment, and the economy slides into a recession. Many investors see Bitcoin as an inflation hedge, and it’s also seen as a risky asset that might come under pressure during a period of shrinking economic growth. So Powell’s hawkish tone was enough to lower bitcoin’s price – just as the largest cryptocurrency was gaining steam.

The Crypto Fear and Greed Index is at the “Fear” level. Retail interest in the crypto market is waning as Google searches for Bitcoin have plummeted to lows not seen in over a year.

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Crypto Fear & Greed Index as of April 22 | Source: Alternative.me

However, Bitcoin generated a positive momentum signal on the daily price chart, similar to in late March. It is up 4% over the past week. That suggests buyers could remain active toward the $46,700 resistance level.

The relative strength index (RSI) on the four-hour chart is declining from overbought levels, typically during a brief pullback in price. Still, support at $40,000 could maintain BTC’s recovery phase. Initial resistance is seen at $42,400, where sellers were active earlier in the New York trading day. However, on the daily chart, the RSI is rising from oversold levels with stronger momentum, indicating a rise in bullish sentiment.

Ether (ETH) grew 2% in the past 24 hours, trading just above $3,100. But now, the second cryptocurrency in the market also fell to $2,987. Altcoins continued their lead relative to Bitcoin, indicating a greater appetite for risk among traders. For example, Tron (TRX) surged by 14%, compared with BTC’s flat performance over the same period. The Graph (GRT) also rose by as much as 6%.

The overall cryptocurrency market cap stands at $1.871 trillion, and Bitcoin’s dominance rate is 41.1%.

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