Bitcoin takes a hit from the Fed and its possible acceleration of tapering stimulus

Bitcoin maintained its rebound on Monday and Tuesday, along with other risk assets, but failed to break above $60,000, yet again being pressured downwards. The November close has been above $57,000, which means a drop for the queen of the 'cryptos' of 7%. All in all, its annual boom remains at 100% and optimists still expect the crypto-asset to stage a rally to $70,000 before the end of the year. In recent hours, due to the words of Federal Reserve (Fed) Chairman, Jerome Powell, Bitcoin´s rises have been limited above $59,000.

Bitcoin´s price plunged after Powell warned that the risk of higher inflation has "increased" on Tuesday, signaling that the central bank would consider accelerating the tapering of its asset-buying policies that boosted risky asset markets.

"A faster Fed 'tapering' and rising (interest) rate hike expectations were bad news for Bitcoin," noted Edward Moya, senior market analyst at Oanda. "Bitcoin is trading more as a risk asset than an inflation hedge."

However, what is interesting is that it appears to have found support around $56,000, ahead of last week's lows, "which could suggest that we are seeing a wave of bargain hunters hoping to cash in on the recent 20%-plus drop," commented Craig Erlam, analyst at Oanda.

"It seems premature considering the wild swings we are seeing in sentiment right now and the downside risks posed by Omicron. However, Bitcoin has performed well since the start of the pandemic," he added, pointing out, in contrast to Powell's words, that there is a view in the market that "if central banks are forced to intervene, Bitcoin could benefit once again."

All in all, the 100-day moving average on the four-hour chart indicates a short-term downtrend. This means that buyers have embarked on clear profit-taking after the rallies of the last month. Recently, the $60,000 resistance level has been a key hurdle for buyers despite oversold readings on the charts. So far, support levels remain intact, which could establish a trading range between $55,000 and $60,000.

BULLISH SIGN FOR ETHEREUM

Regardless of what Bitcoin does, some 'altcoins' are kicking off December with a lot of momentum. The green is prevailing among the main tokens by market capitalization, led by Ethereum, which has reached $4,800 and points to further rises towards the market target of $5,000. The number two cryptocurrency's market cap is around $560 billion, very close to its Nov. 11th milestone, and technical analysis also suggests further upside.

"Ethereum remains most traders' favorite cryptocurrency and looks set to make another rally towards $5,000 once risk appetite returns," Moya further explained.

"Ether bounced from the neckline of the developing head-and-shoulders pattern on Nov. 28th, suggesting that the 'bulls' are defending the level with all their might. Sustained buying pushed the price above the 20-day simple moving average ($4,316) on Nov. 29th," an analysis by 'CoinTelegraph' showed.

The token's all-time high at $4,884 is now the first resistance to overcome and, if successful, the upside is projected to approximately the upper limit of a bullish pennant at $5,252. If it breaks and closes above the upper resistance at $4,551, which it effectively did on Tuesday, closing at $4,631, the correction will be over. Ethereum could then rise to its record high. "A break above this level will invalidate the bearish setup and open the door to a possible rally to $5,796," they ventured from 'CoinDesk'.