Bitcoin price remained in a tight range on Monday even as American stocks pulled back. The BTC coin was trading at $20,700, which was slightly below last week’s high of near 21,090. It has risen by more than 14% from the lowest level in October.
Goldman Sachs warns on rates
Bitcoin and stocks had a strong performance in October. This price action was mostly because of the rising hope that the Federal Reserve will start pivoting away from tightening in the coming months.
Analysts who believe that the Fed should pivot point to the rising fears of a hard landing in the US. As such, they expect that the bank will pause and assess the implications of its recent hikes.
However, recent data suggest that the bank has more room to hike. Data published in October showed that the headline and core consumer price index (CPI) rose to 8.3% in September. That increase was higher than what most analysts were expecting.
Bitcoin price consolidated after analysts at Goldman Sachs upgraded the outlook of Fed rate hikes. In a report, they said that the bank will hike interest rates to 5%, higher than the previous estimate.
To achieve that, analysts at the bank said that they expect the bank will hike by 0.75% this week followed by 50 basis points in December. These hikes will be followed by smaller 25 basis point hikes in February and March.
The analysts cited three reasons for a more hawkish Fed: high inflation, the need to cool the economy, and to avoid easing financial conditions prematurely.
Therefore, if Goldman Sach’s analysts are correct, Bitcoin, cryptocurrencies, and stocks could struggle in the coming months. For example, Ray Dalio recently warned that 4.5% rate hikes would sink stocks by 20%.
Bitcoin price prediction
So, is it safe to buy Bitcoin? The daily chart shows that the BTC price has been in a consolidation phase in the past few days after it staged a strong comeback. It remains slightly above the important psychological level of $20,000 and slightly above the 25-day and 50-day moving averages.
The Relative Strength Index (RSI) has formed a bearish divergence pattern. Therefore, there is a likelihood that the coin will have a bearish breakout as sellers target the key support level at $19,500. A move above the resistance at $21,000 will invalidate the bearish view.
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