Why is Bitcoin price stuck?
Bitcoin price has been stuck inside a narrow trading range for days, awaiting signals from Jerome Powell’s speech at Jackson Hole this week.
Bitcoin (BTC) has been stuck inside a narrow trading range for several days, and Aug. 23 is no different.
All eyes on Jerome Powell’s speech at Jackson Hole
Bitcoin price has been trapped inside the $25,800-26,300 range since Aug. 19, underscoring a growing bias conflict among traders after its 12.5% decline in the month.
Currently, the Bitcoin market has become calmer in the days leading up to the Federal Reserve’s annual Jackson Hole gathering on Aug. 24-26.
Fed chair Jerome Powell will speak on the global economic outlook on Aug. 25, likely sharing his thoughts on interest rates. Minutes from the Fed official gathering in July revealed concern about sustained inflation, which could prompt another rate hike in September.
Powell said in July that the Fed would study economic data at each meeting, and would keep policy restrictive until there’s enough confidence that inflation is moving toward the preferred 2% target.
Nonetheless, the CME FedWatch Tool, which assesses where overnight rates will go, sees an 84.5% chances that the Fed will keep rates unchanged at 525-550 basis points (bps.)
This could partially explain the cautious approach of Bitcoin in recent days, and this trend might continue leading up to Powell’s speech.
The Dollar is stablizing
Likewise, the U.S. dollar index (DXY) chart has also been relatively flat in recent days.
Notably, the index was up 0.2% on Aug. 22, remaining stuck inside the 103-103.68 trading area as investors awaited interest rate clues from Powell’s speech.
Bitcoin has established a strong inverse correlation with the dollar since mid-July, with BTC’s highest point aligning with DXY’s lowest point. As a result, a short-term lull for the dollar has left Bitcoin in a blind spot about the market’s next move.
Related: Bitcoin difficulty jumps 6% to new peak as miners ignore BTC price dip
August is also the least-volatile month for Bitcoin as people go on holiday until after Labor Day, which falls on the first Monday of September.
Oversold BTC price bounce ahead?
Interestingly, Bitcoin’s decline in August has left its daily relative strength index (RSI) in its most oversold state since June 2022.
An oversold RSI typically results in a price bounce, raising Bitcoin’s potential to rebound toward the $26,500-27,500 range (the green zone) by September.
This range has served as support in March and May 2023. It also coincides with Bitcoin’s 200-day exponential moving average (200-day EMA; the blue wave) near $27,225.
Conversely, another selloff will have bears eye the $24,750-25,350 range (the red area) as th next downside target by September.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.