The king of cryptocurrencies is still at the mercy of the bears! – In a market context that continues to darken, the Bitcoin (BTC) however, it is credited with holding the $20,000 support, despite the rout of all risky asset classes since the last Fed meeting. All the more so since the new rate hikes would be registered practically before the middle and end of the year. Unless inflation in the United States fell quickly to tolerable levels.
However, we should not experience a tipping point into a deep recession. This would complicate the US central bank’s task of normalizing its monetary policy. And no doubt, a headwind would once again blow over the king of cryptocurrencies, who would himself pay the price for his correlation with risky asset classes.
Opportunists, the bears would be ready to drive the point home. And in this regard, the latest technical analysis shows no signs of improvement despite the status quo around $20,000 since the end of August. With the prospect of a Fed determined not to give gifts on its monetary tightening and the doubts about tether on its reserves backing its USDT stablecoin, BTC’s bear run since its last ATH in November 2021 is just begging to restart at full throttle.
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Bitcoin in weekly units – On the tightrope
Being at a crossroads would seem like a stretch to me considering that Bitcoin has already been in a bear market for a long time. But the real question is whether or not the $20,000 support will be broken. For now, this week’s doji would indicate uncertainty about the move ahead. For one thing, buyers would be about to have their heads definitely under water. And on the other hand, the sellers would adopt a waiting position.
In any case, the king of cryptocurrencies is currently on a tightrope. Because precisely, the prices and the Chikou Span fight to return within the Kumo (cloud ofIchimoku). Based on these two unfavorable technical signals since last May, this would not favor a change in trend. Not to mention that the latest bounce attempt in weekly units ended in failure under the Tenkan, which is poised to resume a bearish path on a breakout of $20,000.
And if the scenario feared by many investors were to occur, I would fear a new version of the Kijun decline similar to what happened after the break below $35,000 last May. This would eventually push prices back towards the $12,000 support.
Bitcoin in daily units: a bullish respite before the deluge?
As we speak, Bitcoin is doing its best to preserve the $20,000 support. It is clear that it endures for better or for worse. But the price situation and the Chikou Span below the Kumo in daily units would not facilitate a big rally. Especially since prices are currently crashing below the Tenkan.
In the event of a favorable outcome, the king of cryptocurrencies would have a lot of work to tame Kumo and the downline of the bear race. It would absolutely be necessary to cross the $22,000 resistance. Which would not be an easy task, since it is not far from the upper limit of the cloud, the Senkou Span B (SSB). And if things should work out, then $26,000 resistance would be the next target without signaling the end of the bear market.
The other way, I note that there are no strong supports between $12,000 and $20,000 in weekly units. Fearing that a BTC price rush would trigger another wave of correction. However, zooming in on the daily chart, I discovered the support at $16,000 which is midway between the two thresholds mentioned above, both on the upside and downside.
In short, Bitcoin’s bearish streak since its last ATH in November 2021 is about to pick up. Because by dint of testing the $20,000 support, I am afraid sellers will gain an advantage over buyers. And as the current uncertainties in financial markets intensify, the latter could find themselves disoriented. To the point that a capitulation on his part could send the crypto king to levels well below his previous bull run.
And why not imagine four-figure prices as we speak? Certainly I know that would upset some people. But as long as the Fed doesn’t move its monetary tightening one iota, Bitcoin, trapped by its correlation with risky asset classes, will continue to suffer.
Finally, we will also have to be attentive to the case of Tether, which would play an important role in the liquidity of cryptocurrencies through its USDT stablecoin. The Terra (LUNA) scandal should not only serve as a warning. But I have a feeling it could herald further cracks in the digital asset class ecosystem. To follow…
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