Why Bitcoin could be hard to break $ 32K

Bitcoin maintains its crab-like price action as it continues to move sideways on lower and higher time frames. The general outlook for the market turned out to be briefly positive during today’s trading session. However, BTC has returned to the critical support area.

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At the time of writing, BTC is trading at $ 29,700. It has lost about 6% in the last 24 hours.

Notice

Prior to reviving those lows, Bitcoin over $ 32,000 declined and appeared to be heading toward the mid-range of current levels.

BTC is moving on the other side of the 4 hour chart. Source: BTCUSD Trading View

The first cryptocurrency by market cap could respond to the disadvantage in traditional financial stocks. Bitcoin shows a high correlation with the S&P 500 and in particular the Nasdaq 100 Index.

The latter was rejected at a critical level and has been declining since early 2022. This reaction was prompted by the U.S. Federal Reserve (Fed) and the start of its quantitative tightening (QT) program.

Bitcoin fails at $ 32,000?

Unlike a quantitative easing (QE), where the Fed buys assets and expands its balance sheet, the QT program will cause the financial institution to sell $ 1.1 million worth of assets every minute on global markets. This leads to a analysis by CoinBeast Media.

As a result, there could be more downward pressure on global markets, including the crypto industry. The QT may not directly affect the industry. But it will play a key role in global liquidity and investor risk tolerance, exacerbating the conditions that could prevent Bitcoin from reaching new highs.

The Fed has over $ 8.5 trillion in assets on its balance sheet. As CoinBeast points out, the Fed sold less than $ 1 trillion in its assets the last time it started its QT.

This resulted in a 3 week crash in the stock market, posting a 22% loss over the period. The report adds:

“This led to a shortage of dollars and a banking crisis that began in the overnight repurchase market in Q4 2019. This forced Jerome Powell to end QT in September 2019 and produced the” Powell Pivot. “

How will this affect Bitcoin?

Back then, macroeconomic conditions forced Nutrition to change course. After the “Powell Pivot” there was a huge bull run in Bitcoin and stocks.

Today, macroeconomic conditions are different, but they may again force the financial institution to review its strategy. In the meantime, at least another downturn or at least a crab move is likely.

Economist Jan Wüstenfeld explains:

“Given the macro situation and the beginning of the quantitative acceleration, I am not surprised about Bitcoin price action today. You can look at all types of TA, basics, etc., but ignoring the above factors in this environment is likely to lead you to the wrong conclusions. ”

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Text credit: Newsbtc