Bitcoin price has been trapped in a tight range for the past few days, with all eyes on Jerome Powell’s speech at Jackson Hole. The price chart of Bitcoin is in oversold territory according to the relative strength index (RSI), which could indicate a potential price surge, but future movements may depend on Powell’s speech.
Bitcoin price has been stuck in the range of $25,800-$26,300 since August 19, highlighting the increasing bias conflict among investors after a 12.5% drop this month. Currently, the Bitcoin market has calmed down during the days leading up to the Federal Reserve’s annual Jackson Hole meeting on August 24-26.
Federal Reserve Chairman Jerome Powell will deliver a speech on August 25 regarding the global economic outlook and is likely to share his thoughts on interest rates. The minutes of the Fed’s official meeting in July revealed concerns about persistent inflation that could lead to a new rate hike in September.
Powell stated in July that the Fed would assess economic data at each meeting and keep policy restrictive until there is sufficient confidence that inflation is progressing towards the preferred target of 2%. However, the CME FedWatch Tool, which evaluates where overnight rates are headed, sees an 84.5% probability of the Fed keeping rates steady at 525-550 basis points (bps). This could partially explain Bitcoin’s cautious approach in recent days, and this trend may continue until Powell’s speech.
Similarly, the chart of the US dollar index (DXY) has remained relatively flat in recent days. The index stayed in the range of 103-103.68 on August 22, with a 0.2% increase, especially as investors await interest rate clues from Powell’s speech.
Bitcoin has established a strong inverse correlation with the dollar since mid-July, and the highest point of BTC coincided with the lowest point of DXY. As a result, a short-term stagnation in the dollar has left Bitcoin in a blind spot regarding the market’s next move.
Interestingly, the drop in Bitcoin’s price in August has put the daily relative strength index (RSI) in its most oversold condition since June 2022. Oversold RSI typically leads to a price bounce and increases the potential for Bitcoin to recover towards the range of $26,500-$27,500 (green zone) by September. This range served as support in March and May 2023. It also aligns with the 200-day exponential moving average (200-day EMA; blue wave) near $27,225. Conversely, another wave of selling would see bears target the range of $24,750-$25,350 (red zone) as the next downside objective until September.