BTC/USD Tests Familiar Support after Fed Minutes

Bitcoin has shown resilience through the jump in Treasury yields, even as gold prices have slumped. However, BTC is trading lower for a fourth consecutive day and is testing key support at $82.5K as headwinds build.

BTC is down 1.7% over the past 24 hours, with losses since Monday totalling 4%. The latest leg lower comes after Fed minutes showed policymakers still see another rate hike this year, while oil prices rise and Treasury yields reach fresh multi-decade highs.

Fed Minutes Point to Another Hike This Year

The minutes to the September Fed meeting showed broad support for the decision to hike rates, with all officials backing the move and most expecting to raise rates again before the end of the year.

The committee voted 12-0 to lift rates by 25 basis points to 3.75%-4%, the first rate hike since 2023. The minutes showed that support went beyond voting members, with every participant in the meeting backing the move. The minutes said most participants considered that another increase would likely be appropriate by the end of the year as inflation risks remained tilted to the upside.

With inflation well above the Fed’s 2% target, staff projections showed it was not expected to return to target until 2029. The minutes also highlighted elevated energy prices and the AI boom as potential sources of inflation.

In short, the minutes keep a December hike very much on the table. The market is pricing in an 80% chance of a hike in December, approximately unchanged from before the release. The probability of an October hike is just 17%, down from 70% two weeks ago.

Bitcoin tends to perform better in lower interest-rate environments, making the prospect of another Fed hike a headwind.

Next week sees the release of U.S. CPI inflation data, which will likely be the next major catalyst. Hotter-than-expected inflation could lift Treasury yields and the USD further, creating additional headwinds for BTC.

Treasury yields remain elevated, with the 10-year yield rising to 5.33% its highest level since 2002, while the 30-year yield reached a peak of 6.036%, a 28-year high.

Inflation and high levels of government debt remain major concerns for the market. With oil prices back above $100 a barrel and no end to the Middle East conflict in sight, the outlook for yields remains elevated, keeping financial conditions tight.

BTC/USD Technical Analysis

Bitcoin’s rally from the $65K breakout in mid-August ran into resistance at $87.3K, an eight-month high, and has since traded in a holding pattern, limited on the downside by $82.5K and capped on the upside by $87.3K.

The price is testing the lower bound of this holding pattern at $82.5K, a significant level as it marked the high back in May and came back into play again last week, offering support before BTC rallied to test $87K.

The price continues to trade above the 50 and 200 EMAs, keeping the outlook constructive. If support holds again, buyers will look towards $87K for another test.

However, a break below $82.5K exposes the 50 EMA at $79.6K. Below here, the 200 EMA comes into focus at $75K, with a break below this level potentially giving sellers greater traction.