Warsh’s Hawkish Debut Overshadows Middle East Peace Deal

Failed move above $65K signals lingering bearish pressure.

The US and Iran signed a Memorandum of Understanding (MoU), bringing a temporary end to the Middle East conflict and setting the stage for further talks. The Strait of Hormuz will reopen after being closed for months, choking oil and liquefied natural gas supplies.

The MoU will act as a framework for solving issues like Iran’s nuclear program at a later time. This was a major issue for Trump in the past, and signing the agreement without it being fully solved could jeopardize a long-standing peace. If Iran does not agree to dispose of its enriched uranium stockpiles or to deal with the issue in an acceptable manner, what will Trump do? Accept a compromise and potentially lose face, or start military action again?

Even if this is not a definitive end of the war, it’s a very positive development, which should have sent Bitcoin higher. However, the crypto market failed to capitalize on the news and fell after a brief recovery. Bitcoin inched above $67,250 at the beginning of the week, but gave up all the gains and dropped to the $62K area by Thursday.

Warsh Takes the Stage

Part of the reason for the drop could be the FOMC meeting on Wednesday, where Kevin Warsh held his first press conference as Fed Chair. The main talking point was “price stability”, and considering that the latest jobs numbers exceeded expectations, and the US is dealing with inflation above 4.0%, a rate hike this year is expected.

At the time of writing, the probability of a rate hike in September is 49%, up from 27% a day prior, according to the CME FedWatch tool. At least for the time being, it looks like the prospect of a higher US interest rate overshadows the end of the months-long Middle East conflict when it comes to Bitcoin prices.

Chart Analysis – BTC/USD

The fact that Bitcoin returned below $65K could spell trouble going forward. The bulls broke above the resistance, but despite easing geopolitical tensions, they failed to sustain a stronger rally. This shows buyer weakness and signals that more downside will follow.

However, if we see a quick return above $65K, and the level successfully turns into support, then the chances of a recovery will increase. There’s a double bottom at $59K, which is a bullish pattern that often appears at the end of a downtrend. Also, the RSI was recently oversold, which supports the idea of a move north. In case of a bullish scenario, the first major resistance and target is $71K, followed by the three moving averages: 50-day, 100-day, and 200-day MAs.