Bitcoin Price Correction After Multi-Month Downtrend

Bitcoin Price Correction After Multi-Month Downtrend

On August 15, the price of bitcoin (BTC) and the broader market corrected, as the S&P 500 and Dow Jones looked to continue their advance after four straight weeks of strong gains. Data from TradingView and CNBC show that the Dow Jones broke through its 200-day moving average, the first since April 21 and perhaps a sign for bulls that the market is grounded.

Dow Jones Industrial Average (DJI). Source: Trade View

While equity markets have been bullish against high inflation and a steady schedule of interest rate hikes, some traders fear that the current 32-day rally in the DOW and S&P 500 could be a bone of contention for the market.

The release of Federal Open Market Committee (FOMC) minutes this week (August 17) should shed more light on the Federal Reserve’s current view on the health of the US economy and may shed light on the size of the first hike other in the interest rate.

Over the past month, overzealous cryptocurrency traders on Twitter have also been highlighting a scenario where bitcoin, ether (ETH), and altcoins will sell off ahead of the FOMC meetings and then rally if the rate set was in line with the expected figure with it by investors. .

Somehow, this near-term dynamic is also fueling investors’ belief that the Fed will “recover” from its monetary policy of higher interest rates and quantitative tightening after “spike inflation”. This can be a somewhat profitable trade for savvy day traders, but it is important to note that inflation is currently 8.5% and the Fed’s target is 2%, which is far from the case.

Ultimately, there is a strong correlation between the price of bitcoin and the S&P 500. Investors are therefore well advised to avoid the “tunnel vision” type of reasoning that comes with their bias and keep an eye on the performance of the stock market.

Bitcoin Crashes at Multi-Month Trend

Over the weekend, bitcoin made a strong move on a multi-month downtrend and broke through the $24,000 level, following a trajectory that many traders had hoped would trigger an upward move. 29,000 dollars.

BTC looked like it was about to take off last night – and now we have 2x more opportunities to come out of the shadows.—Cheds (@BigCheds) August 15, 2022.

The trader is Cheds declared BTC looked like it was about to take off last night” but the sell-off at resistance created an “outer bar” when “the previous trend was challenged” and according to Cheds this is a sign that “b ‘maybe the trend is coming across. resistance. So watch out for signs of further weakening. »

Bitcoin’s Bollinger Bands are also tightening, a sign that a directional move is imminent, but we’ve already seen an increase in the band above the $25,600 trend resistance. Is a retest of $22,400 needed before BTC tries to move higher? Few people mentioned the falling wedge… — Big Smokey (@big_smokey1) August 15, 2022.

The trader known as “Big Smokey” seemed to agree that “strong directional movement It may happen, citing the tightening of the Bollinger Bands and the separation of the Super Guppy indicators, as the price of bitcoin approaches the multi-month downward trend.

There are several signs that a strong directional move is in sight for bitcoin: the Super Guppy is tightening, it might trigger a 26% jump to $28,000 before moving to the other side or playing the other side or that the $24,000 retest will decrease new liquidity. support or resistance by then… — Big Smokey (@big_smokey1) August 15, 2022.

In another graphic, there is Big Smokey recommended if the downtrend is broken, bitcoin could see “a 26% jump to $28,000 before another sideways swing,” which would lead to a retest of the $24,000 level.

After hitting similar upper resistance levels, most altcoins have also followed bitcoin’s lead in posting single-digit losses, but those that have been showing signs of a bottom are still rounding out the patterns apparently reversed.

AVAX, FTM and SOL daily chart. Source: Trade View

Also read: Shiba Inu eyes 50% rally as SHIB price enters ‘short and handle’ breakout mode

Every dog ​​has its day

Interestingly enough, on Sunday (August 14), popular traders on Crypto Twitter predicted that strong gains in meme tokens like Shiba Inu (SHIB) and Dogecoin (DOGE) were a clear sign that the the bullish phase was too longand on the way to correction.

I pulled this from the archives. One year apart, same sector, different species. Time is a flat circle.—Hsaka (@HsakaTrades) August 14, 2022.

Finally, after a 130% and 42.5% rally in Ether and BTC, everyone was ready to take profits, especially at the resistance level. Open interest in both assets remains near all-time highs, but it is unclear what it will take to trigger a breakout or bust in BTC on the multi-month downtrend.

Perhaps a 1% rate hike, tighter regulation of the digital framework, or an unexpected stock market reversal could lower the price to annual lows. In contrast, a successful Ethereum merger could be a positive catalyst that triggers a high-volume rally above Bitcoin’s key resistance level.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of All investment and trading involves risk. You should do your own research before making a decision.

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Bitcoin price hits multi-day low, data warns of 'overbought' stocks

Bitcoin price hits multi-day low, data warns of ‘overbought’ stocks