Bitcoin strength may be casting doubt on Fed hawkishness

Bitcoin is showing signs of accumulation. The weekly chart has charted a higher trough (HT) followed by a higher peak (HP) - an uptrend. This strength comes after a massive selldown following a 52.3% decline into January. The November distribution is shaded in red, and the current accumulation is green.

The cryptocurrency has traded above its black 30-week EMA, a bullish development. If the EMA turns up, it will be another sign of bullishness.

This uptrend is interesting, given that the dollar is also showing signs of strength. Moreover, the Fed has suggested a hawkish hiking cycle and aggressive quantitative tightening. One may be forgiven for thinking that this would act as a headwind for bitcoin. However, the fact that the crypto is outperforming the greenback may suggest that the market is doubting the Fed's true capacity to be this hawkish, given the potential stagflation obstructions that make monetary policy implementation more complex.

We are carefully considering the stochastic indicator. If it makes its way to its upper quintile and holds (blue arrow), we suggest that the Fed may be too optimistic in its cycle projections.