A practicing trader and founder of the project Crypto Shaman, Vadim Shovkun, explains the current market situation.
This analysis is a continuation of the previous detailed overview. Since then, Bitcoin has fallen by 6%, the S&P 500 by 5%. But unlike the stock index, the leading cryptocurrency has held off from further declines.
On the day of remarks by Fed Chair Jerome Powell and an increase of the policy rate by 75 basis points, there was an abnormally large amount of volume on Bitcoin. It has not yet yielded results, so it can be interpreted as purchases.
This month there have already been three new lows, not counting $17,600. There is a gradual squeeze toward this level in the form of a large descending triangle. The price also failed to surpass the key high of $20,193; there are no signs of a break in the downward structure. These are negative technical indicators.
A positive factor supporting a rise is the abnormally high volume, which did not yield results over the course of a couple of days, as well as the stubborn resistance of the S&P 500. Since the last update the index has fallen another 5% in three days.
Against such a drop, Bitcoin has held up rather confidently. Indicators, such as RSI, also show signs of a possible bounce.
At the moment Bitcoin shows signs of local strength. If the pressure from the stock index on the leading cryptocurrency eases, there is a chance to revisit the $21,000–$22,000 range.
Bitcoin rarely broke through key levels when the S&P 500 was falling. Inflation, rate hikes, ‘black swans’, Russia’s invasion of Ukraine, and the energy crisis in Europe—all of this, while negatively affecting digital gold, still responds after the release of key information related to these topics.
The main driver of Bitcoin, as a rule, is news from the cryptocurrency industry. An example is the Terra collapse, which knocked BTC’s price down by 26% in just a few days. Other funds associated with the project began to go bankrupt, continuing to drag the market lower, collectively reducing the price of the leading cryptocurrency by 50%.
It is possible that Bitcoin will test a yearly low due to the squeeze and the accumulation of a huge amount of liquidity beneath the key level. But more likely this will occur after a rebound — at a moment when market fear is much lower.
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