Bitcoin showed a trend that probably caught some traders in the trap yesterday… In fact, after crossing the key $20,000 threshold this morning, and after staying above this area for a few hours, BTC / USD suddenly corrected , more than reversing the morning’s gains. .
So Bitcoin marked a weekly low towards $18,400 early this morning and at the current price of $18,590, the cryptocurrency is showing a 7.7% drop over 24 hours.
Note that the sudden bearish reversal in Bitcoin yesterday afternoon coincided with a bearish reversal in US equities as well, which started the day higher.
Fed set to stay hawkish, sanctions Bitcoin traders
As for the reason for this reversal, it should be noted that some major American statistics published yesterday evening showed a good surprise, suggesting that the Fed will judge that it has a free hand to continue the tightening huge on his monetary policy. impact on the economy.
Later, Fed member James Bullard came to drive the point home with mostly hawkish comments, as usual, during a speech. This added to the prospects of further Fed rate hikes as part of the fight against inflation, which further pressured Bitcoin.
Remember that central bank rate hikes are bearish factors for cryptocurrencies in general and the Bitcoin price in particular, because it increases the comparative attractiveness of money market investments with guaranteed capital, and makes it more expensive to borrow to invest. Moreover, it creates a general feeling of risk aversion that keeps investors away from more speculative assets such as Bitcoin.
Crypto-assets are a risky investment.
BTC/USD Rejected Lower from Long Term Trend
But there are other reasons, related to technical analysis, which also explain Bitcoin’s sudden bearish reversal yesterday and back below the key $20,000 threshold.
To achieve this, you have to leave the short-term charts and step back on the daily chart, or the weekly chart. On these time frames, a downward line can easily be seen extending from the November 2021 high near $70,000, as seen in the weekly chart below:
However, Bitcoin crossed this line yesterday, just before turning around. So yesterday’s fall, graphically, is due to a rejection from this trendline. Currently sitting just above $20,000, this line must be crossed to consider Bitcoin’s crypto trading operation long-term.
But for now, sellers still dominate the exchanges, and another drop in Bitcoin cannot be ruled out. In this context, the September 21 low at $18,157, together with the psychological threshold of $18,000, is the first area of support to consider. Further down, the BTC/USD yearly low at $17,600 will be the next target for the bears.
Other Important Bitcoin Events This Week
Finally, given the similar impact that the US statistics had on the price of Bitcoin yesterday, as we explained at the beginning of this analysis, we will continue to monitor the next important data of the United States that may to influence the next decisions from the Diet.
Speaking of which, commitments on US home sales are expected this afternoon at 4 pm, shortly before a speech by Fed chief Jerome Powell at 4: 15 pm Tomorrow then a new estimate of GDP Q2 for the markets that will be needed from Bitcoin traders. to look ahead to the Core PCE price index, the Fed’s preferred measure of inflation, on Friday evening.
Looking for alternatives to Bitcoin despite its inability to break above $20,000? Check out our guide to the best cryptocurrencies to invest in for the long term!