• Any chances of a US recession will dampen the price rally in Bitcoin and crypto and could potentially flip bearish for the asset class.
• The bulls continue to defend BTC. On the technical chart, the BTC price is on the cusp of a golden cross.

After a strong rally last week, the world’s largest cryptocurrency Bitcoin (BTC) has failed to hold above its psychological resistance of $23,000. Over the last weekend, the BTC price has been under a bit of selling pressure and is currently trading at $22,858 with a market cap of $440 billion.

Well, it seems that Bitcoin bulls are waiting for Federal Reserve Chairman Jerome Powell’s speech, scheduled for Tuesday, February 7. The start to the earnings season has been pretty mediocre and even the big-tech companies are failing to meet their earnings estimates.

Currently, only 1 percent of the companies in the S&P 500 have managed to beat their earnings estimates. This is well below the five-year average of 8.6 percent and the ten-year average of 6.4 percent. However, the strong jobs data pours water on the expectation that the Fed might soon end its monetary tightening measures.

Thus, if the Fed’s chairman hints at aggressive rate hikes ahead this year, it might put an end to the recent rally in the risk-on assets. Above $23,000, the next immediate resistance for Bitcoin will be $25,000. On the downside, Bitcoin has strong psychological support at $20,000.

After a brutal 2022, Bitcoin has rallied more than 40% since the beginning of 2023. However, until further clarity in the global markets, the BTC price is likely to continue oscillating between $20,000 and $23,000.

Bitcoin and US Recession

The fears of an imminent US recession amid an aggressive Fed stance are growing. In his recent YouTube live stream Michaël van de Poppe stated that there’s a growing chance that Bitcoin and other risk-on assets could witness a bearish flip.

Poppe added that considering Fed’s future rate hikes, the US could “probably have” a recession going ahead. He added:

I think that people should understand that there is no soft landing, that there is likely a continuation of this downward trend on the markets.

A lot of things depend on the CPI data for January 23, coming ahead this month on February 14. If the inflation slowdown is less than expected, the US dollar will gain strength once again and disrupt the current rally in the market.

If the US slips into a recession, this would be the first recession for Bitcoin and the broader crypto market. Thus, it’s difficult to predict how far can BTC be correct in such a scenario. Comparing Bitcoin to Nasdaq 100 Index, Bloomberg’s senior macro strategist – Mike McGlone – explained that any dip under the 200-week moving average could lead to a 40-70% price correction.

The Bull Case Scenario for Bitcoin

However, some other market analysts believe that Bitcoin is not likely to fall much and will find support at a higher low. Crypto and market education, analysis, and prediction tool, IncomeSharks noted:

Just remember majority of bulls are still holding and not selling. Bears are stuck in cash. Slowly but surely the bears are caving in and buying. The stubborn ones keep shorting driving price up further.

On the technical chart, the BTC price is on the cusp of a golden cross where the 50-day average price tops the 200-day. Sean Farrell, Fundstrat Global Advisors’ digital-asset strategy head, wrote:

Most instances of a golden cross have resulted in favorable returns for Bitcoin, and many have occurred at critical long-term inflection points.