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Bitcoin falls after strong bounce, Fed may cause even more volatility

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Bitcoin falls after strong bounce, Fed may cause even more volatility

In these daily bitcoin (BTC) updates from Tips9ja, we have regularly indicated in recent days that the publication of the inflation figures in the US could cause a lot of volatility in the financial markets, especially if it turns out higher than expected. That turned out to be exactly what happened yesterday afternoon. The stock markets fell for a while and that panic spread to the cryptocurrency market.

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The consumer price index (CPI) is no less than 7.5%, the highest since 1982. Nevertheless, the damage to bitcoin remained small. Most investors are still holding onto their BTC tightly and a few bought the dip right away. As a result, the price was able to make a strong bounce almost immediately . However, it didn’t stop there.

Bitcoin makes a big bounce, but then falls anyway
The bitcoin price was on the rise before the CPI publication and gradually pushed through the resistance around USD 45,000. Then the numbers came out and bitcoin plunged from $45,200 to $43,300, down 4.2% in less than an hour.

Bitcoin immediately made a strong bounce and the price shot back to $45,250. Bitcoin then continued to climb a little further, reaching a high of about $45,700, its highest price in more than five weeks.

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However, bitcoin then started to fall sharply. The price initially appeared to decouple further from the equity markets, but the correlation then increased again. That may have had to do with the Federal Reserve, which spoke shortly after publication of a possible earlier hike in interest rates to curb inflation.

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Bitcoin fell about 6% to $42,900 during last night and last night. Still, the USD 43,000, a crucial level, appears to be holding out as support . Bitcoin is at $43,500 on Binance and $38,150 on Bitvavo at the time of writing .

Bitcoin Analysts Bullish, But Volatility May Be Coming
The Fed will hold a closed meeting on February 14. Inflation figures are turning out higher than expected, prompting speculation that the US central bank may choose to raise interest rates sooner. That could again cause a lot of volatility and perhaps even turn out bearish for bitcoin. Despite this, the on-chain data still looks promising.

For now, it’s a good sign that bitcoin is holding up above USD 43,000 and the 50-day exponential moving average (EMA). Bitcoin is still in a trend of higher highs and higher lows. Still, a pullback to $38,000-$40,000 is still possible, but there should be a lot of support right now. However, if bitcoin breaks through $45,000, there will still be a lot of resistance between $46,000 and $50,000.

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