In what case can the rate of the first cryptocurrency fall to $12,000, and under what circumstances will investors be able to reverse the downtrend?
On Sunday, August 28, Bitcoin is trading at $20,000. Over the past week, the first cryptocurrency has fallen in price by 5%. On Saturday, the asset rate updated a local minimum at $19.8 thousand.
“Buyers will have the opportunity to reverse the bearish trend”
In the week of August 22-28, the BTC/USDt pair traded in the $20.7-21.9k price range most of the time. At the start of the week, the focus of investors was the annual economic policy symposium at Jackson Hole. They were looking forward to J. Powell’s performance at the end of the week. His speech could lead to a revision of expectations on the dynamics of the Fed’s key rate, so activity in all markets was low until Friday .
The US dollar drew strength from the weakening of the single currency and also had a negative impact on the cryptocurrency market. The price of gas in Europe rose to $3.54 thousand per thousand cubic meters. Trades ended at $3.16 thousand. Due to the energy crisis in Europe, gas prices are rising in Asia and the US. All this leads to the unwinding of inflation in the world. And as we know, the US Federal Reserve is fighting inflation by raising rates. Everything in the world is interconnected.
On Friday, August 26, at the end of the day, Bitcoin fell by 6.11%, to $20.2 thousand. High volatility in the market was observed closer to the opening of the American session. Before the Fed Chairman Jerome Powell‘s speech, the bitcoin rate rose to $21.8 thousand. Approaching the resistance of $21.9 thousand, the price fell by 8%, to $20.1 thousand. The ether rate sank by 12.8%, to $1.4 thousand. from your resistance.
The cryptocurrency turned lower amid a flight from risky assets and a recovery in the US dollar after Powell’s speech. The S&P500 fell 3.46% to 4053.65 points, the Nasdaq fell 3.94% to 12141.71 points. The dollar index (DXY) recouped the day’s losses, climbing to 108.75 points without continuing the rally.
Fed Chairman Powell said at a conference in Jackson Hole that the US economy will need tight monetary policy “for a period of time” before inflation is brought under control. The regulator also expects conditions on the labor market to worsen. He gave no hint of what the Fed would do at the September 20-21 meeting. He was just as tough-minded as his colleagues.
Powell said nothing new. Everything has been said by his colleagues before. Officials can approve a rate hike of 50 or 75 basis points. Futures on the Fed’s interest rate after his speech began to show higher chances for a third consecutive rate hike of 75 basis points.
It is clear from the speech of the head of the Fed that the fight against inflation is more important than supporting the growth of the US economy. It is unclear what the trajectory of a rate hike in 2023 might look like. Fed officials say they will closely monitor upcoming economic data when making their decisions.
After the symposium at Jackson Hole, the technical picture worsened for bitcoin. Sellers broke the trend line from the low of $17.6k (June 18, 2022). Now the way is open for them to support $18-19 thousand.
The downward movement from the top of $25.2 thousand to $19.9 thousand has a complete three-wave structure. The first down wave is larger than the last. If buyers could accelerate upwards over the weekend to test the $22k level, then the $25k level would reappear on the horizon. . Stock indices closed lower.
There is another interesting chart pattern for a bounce up – three lower bottoms to the $18k-$19k zone in the form of a wedge. With a sharp rebound in such a pattern, a “double bottom” will form. So buyers will have the opportunity to reverse the bearish trend and trigger a “crypto spring”.
If aggressive sales begin on Monday, and the $18-19 thousand zone does not resist, then we can consider a downward movement in the form of two three-wave structures with a target of $12-12.5 thousand. inflation and recession in the US to crash the US stock market.
“Investors will stick to the waiting policy”
Most likely, the next week will be relatively calm. We expect that bitcoin will continue to be in the $19-22 thousand corridor, mainly at the lower border of this zone.
The market does not expect any events that could affect the rate in the coming week. Even a potential market disturbance due to derivatives is excluded – the expiration for the main instruments took place on August 25-26.
Investors are likely to take a wait-and-see approach, due to the fact that the main events will take place in the second half of September: in the period between September 10 and 16, there will be a “Merger” in the Ethereum network, 20-21 FOMC meeting, September 30 futures expiration .
