Bitcoin and other cryptocurrencies continued retreating as traders embraced a risk-off sentiment after the hawkish Fed statement. BTC/USD also dropped as Silvergate, a major crypto bank collapsed. Bitcoin was trading at $22,000, about $3,200 below the highest level this year.

The focus shifts to data

Jerome Powell delivered a relatively hawkish statement on Tuesday that pushed crypto and stocks lower. It also pushed the closely-watched VIX index, bond yields, and the US dollar higher. In his first day of testimony, Powell reiterated that the Fed would continue hiking interest rates in a more aggressive tone than earlier expected.

Before the statement, expectations were that the Fed would hike interest rates by 0.25% in March followed by two more similar hikes. Most analysts expected that the bank would start cutting rates later this year or in 2024.

After the statement, expectations for rate hikes increased, with analysts now pricing in a 50 basis point hike in March. In his second day of testimony, Powell said that the Fed would remain data-dependent. As such, if the upcoming jobs and inflation numbers beat expectation, the Fed will likely deliver bigger hikes.

Meanwhile, the BTC/USD pair is also reacting to the ongoing meltdown of Silvergate Capital, a firm that banks for most companies in the industry. Its stock has plummeted as concerns about its viability continue. In a statement, the company said that it will shut down and return deposits to customers. It became the other major firm in the industry to collapse after FTX, Voyager Digital, Celsius, and BlockFi.

BTC/USD technical analysis

The BTC/USD pair made a bearish breakout in line with my previous forecast. Before this decline, it had formed a bearish pennant pattern, which is usually a sign that things are about to get worse. The pair has moved below the Woodie pivot point. It also remains below the 50-day moving average while the MACD has formed a bullish divergence pattern. The Stochastic Oscillator moved close to the oversold level.

Therefore, while the overall trend is bearish, the pair will likely have a relief rally ahead of the upcoming non-farm payrolls (NFP) data. If this happens, the pair will likely move to retest the Woodie pivot point at 22,715.

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