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Deal or Delay? Market Doesn't Buy It (Yet)

The news that the U.S. Federal Reserve could delay a planned interest rate hike sparked a rally in risk assets on Wednesday, with stocks rising sharply and Bitcoin price heating up.

After a 1.25% increase, the S&P 500 closed at 4,493.77. The Dow Jones Industrial Average rose 1.31%, or 438 points, to close at 34,378.64. The Nasdaq Composite Index closed at 14,070.18, up 1.48%.

The market reacted positively to the minutes of the Fed's July policy meeting, which showed that some officials were open to pausing rate increases to assess the economic impact of past hikes.

"A few participants observed that, in the event an adjustment in the policy rate was warranted at the upcoming meeting, and assuming the economic data developed largely in line with expectations, it could be appropriate to hold the policy rate steady and defer further increments in the accumulation of the Federal Reserve's holdings of Treasury bonds and agency mortgage-backed securities until later in the year," the minutes stated.

The prospect of a delayed rate hike, which could buy time for the economy to cool and reduce sticky inflation, buoyed market sentiment.

Bitcoin price also soared, rising 115% while retaining a 10% base rate — risk assets initially surged. Bitcoin followed suit with a fast move upward.

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Technicals: Overbought Conditions and Key Levels

Bitcoin price is now testing weekly resistance at $104,460, which could be a crucial level to watch for potential rejection.

If this level breaks, the next resistance level to consider is the swing high around $105,900, where some selling pressure could emerge.

On the downside, support is at the 50% Fibonacci retracement level of the recent move from the lows at $99,595.

A break below this level could open the door for a move to the daily swing low at $93,327.

If buyers manage to push Bitcoin price above the all-time highs of around $110,000, the next target could be the $120,000 psychological level.

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