Bitcoin's precarious tightrope walk at $77,000… Is its fate in Chairman Powell's hands?

▲ Jerome Powell, Bitcoin (BTC)/ChatGPT generated image ©

While the leading cryptocurrency, Bitcoin (BTC), is attempting a precarious rebound by recovering the $77,000 mark, the market is engulfed in a calm before the storm, with institutional fund outflows overlapping with geopolitical tensions in the Middle East. Bitcoin's future fate and direction now entirely depend on the U.S. Federal Reserve (Fed)'s interest rate decisions and Chairman Jerome Powell's words.

According to investment media FXStreet on April 29 (local time), Bitcoin slightly rebounded above $77,000 in Wednesday's European trading session after falling approximately 3% over the past two days. Investors are refraining from premature trading and are closely watching the Fed's monetary policy decision, to be announced late on Wednesday, and Chairman Powell's remarks at the press conference. These remarks are key variables that will determine the direction of the dollar (USD) and provide new rally momentum for risk assets like Bitcoin.

Analysts at the cryptocurrency exchange Bitfinex diagnosed that interest rates affect yields and the dollar index, which in turn directly impacts spot exchange-traded fund (ETF) flows and prices. If the Fed hawkishly freezes interest rates, Bitcoin's upside could be limited around $72,100. Conversely, if the Fed adopts a dovish stance, opening the possibility of future rate cuts, spot fund inflows could accelerate, leading to a rally in the $80,000 to $84,000 range, they predicted.

Weakened demand from institutional investors and geopolitical risks are also major factors suppressing the rally. According to SoSoValue data, U.S. Bitcoin spot funds recorded a net outflow of $89.68 million on Tuesday, following an outflow of $263.18 million on Monday, ending a nine-day streak of net inflows that began in mid-April. Furthermore, uncertainty surrounding the Middle East conflict is cooling risk appetite after U.S. President Donald Trump abruptly canceled the dispatch of a special envoy to Pakistan and expressed dissatisfaction with Iran's new peace proposal.

Technical indicators are sending somewhat mixed signals. The Relative Strength Index on the daily chart points to moderate buying momentum around 58, but the Moving Average Convergence Divergence (MACD) has fallen below its signal line, forming a negative histogram, warning that the upward trend could slow near a strong resistance level. Currently, Bitcoin is precariously testing support above its 50-day Exponential Moving Average (EMA) at $73,609 and its 100-day EMA at $75,660.

If the price faces downward pressure, the primary support level is around $75,680, and failure to hold this could lead to a drop to $74,487 and then to $68,950. Conversely, to expand its upward trajectory, Bitcoin must first break through $78,962 and the psychological barrier of $80,000. Subsequently, it needs to overcome the 200-day EMA at $82,191 and the massive supply zone around $84,410 to sustain a full-fledged bullish trend.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*