Following the Federal Reserve’s announcement on Wednesday regarding reducing balance sheet size, Bitcoin fell below $36K following a brief rally to nearly $39K.
Data from Binance showed that Bitcoin was changing hands at about $35.5K at the time of drafting this report.
In the same period, Ethereum, the second most valuable cryptocurrency by market capitalization, traded over $2.3K and was slightly up.
As the market believed the news was already “priced in”, the flagship crypto briefly rose to nearly $39K right after the U.S. central bank released its statement.
Read: Is buying Bitcoin now a good idea?
Bitcoin lost its gains as investors and traders assessed Fed Chairman Jerome Powell’s remarks. In addition, Powell indicated that the central bank would gradually remove support for the economy as a means to fight high inflation.
This decision comes at a time when the Fed is winding down its asset-purchasing program. Throughout the past year, monetary stimulus has been a significant source of market support, which has contributed to the strength of both equities and the crypto market
The price of Bitcoin rose after a sharp sell-off 2 days ago, suggesting renewed buying after a deep oversold state. It is likely that the current price bounce will be stalled by resistance at $40K.
Read: Bitcoin crash: what HODLERs are saying
On the daily chart, the relative strength index (RSI) continues to rise from extremely oversold levels, suggesting that buyers may remain active this week.
Despite these weak momentum signals, there is limited upside potential. In order to signal a recovery phase, buyers will need to move decisively above $40K in the short term.
