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Following CPI publication, the Dollar started to strengthen its positions and the price of Bitcoin decreased to $441.
Our yesterday's forecast came true, partly. Until the time of the release of the CPI, the Bitcoin vs. Dollar exchange rate was moving up to $460, but following the publication, the Dollar started to strengthen its positions on the market and the price of Bitcoin decreased to $441. We expected to see Bitcoin’s pullback to $425 and $410, which luckily for traders did not happen.
This suggests that Bitcoin has a strong potential and investors trust in this cryptocurrency. However, the Dollar is the main competitor for the Bitcoin.
Today we are waiting for a very important decision from the Federal Reserve System and publication of the US monetary policy. It will set the tone on the currency market for some time to come. What does this mean?
First, we will learn of the new interest rate. The Federal Reserve's committee today will hold the eighth conference to deliver the progress report to investors and to show the results of voting on interest rates. The decision of what should be the interest rate depends on the inflation and economy growth prospects. High interest rates attract foreign investors, who tend to make less risky investments, which impacts the strength of the Dollar. If interest rates go higher than expected – the demand for the Dollar will increase. The previous interest rate was 0.25%. Now it is forecasted to be 0.50%. So there is a reason to believe that a Dollar will gain strength today.
Secondly, we are waiting for today’s speech of the Federal Reserve Board chair Janet Yellen. Such rhetoric usually has a major impact on the market.
Today we expect continuation of sideways trend in the range of $460 - $430. When the interest rate is released and the Fed Chairman’s speech is given, a high volatility and short-term pullback of Bitcoin price to $425 and $410 are possible.
Today, December 16, the resistance level is $470. Support levels are $410 and $425.
The analysis and prognosis are the personal views of the author and are not a recommendation to buy or sell Bitcoins.
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