Experts explained what factors will affect the price of the first cryptocurrency in the short term
On September 5, bitcoin is trading at $19.7 thousand, over the past week the price of the cryptocurrency has not changed much – it has grown by 0.6%. Experts told what dynamics to expect from the asset in the coming days, and in which case it can update local minima.
Search for levels before the US Federal Reserve meeting
Financial Analyst BitRiver
The week from August 29 to September 4 was relatively calm. Throughout the week, the price was trading in the range of a thousand dollars between $19.5 thousand and $20.5 thousand. The bitcoin rate decreased to the lower border of the channel of $19.5 thousand against the backdrop of falling stock indices and the strengthening of the dollar on forex. The price was recovering to the upper border of the channel against the backdrop of rising indices and a decrease in the dollar index.
Since the beginning of the week, risky assets have been under pressure in anticipation of new signals regarding the Fed’s monetary policy and Friday’s report on the US labor market for August. The Chinese authorities added fuel to the fire by announcing a lockdown in Chengdu due to the outbreak of COVID-19.
I had confidence that after a weekly consolidation the price would come out of the range of $19.5-20.5 thousand after the publication of the report on the US labor market for August on Friday. The report is of interest to the Fed, so before the September meeting, indices and cryptocurrencies could show strong fluctuations.
Volatility increased in all markets (debt, currency, stock, cryptocurrency), but the BTC/USDT pair remained trading in a range. Now let’s figure out why it remained to be traded for about $20,000.
The report for August turned out to be better than the forecast. The US non-farm payrolls increased by 315,000 in August against expectations of 300,000. July figures are revised down to 526,000. The largest increases were in the professional and business services, healthcare and retail sectors.
The unemployment rate rose from 3.5% to 3.7%. Average hourly earnings increased 5.2% year-over-year, slightly below estimates. The rise in wages came amid soaring inflation and fears of a slowdown in the economy.
The US dollar fell after the release of the data. Stock indices have grown, the cryptocurrency has risen in price. The report points to a 50 basis point rate hike at the September FOMC meeting, but does not resolve the issue by itself. This is confirmed by the CME FedWatch Tool data. Probability of a 50bp rate hike is 43%, by 75 b.p. – 57%. At the beginning of the week, the probability of a rate hike was 39% and 61%, respectively.
Everything seemed to be fine and unexpectedly for everyone, the indices are turning down, the dollar index is up. I have one option here – market participants began to exit risky assets on the news that Gazprom suspended natural gas pipeline deliveries to Europe for an indefinite period.
I have already said that the share of the euro in the dollar index is 57%. The negative news for the euro arrived, and everything went down. The S&P500 index sank 1.04%, the Nasdaq index – 1.31%.
For the week from September 5 to September 11, the situation for the cryptocurrency market remains uncertain. The SP500 index is near the trend line and could fall even lower as the energy crisis in Europe intensifies. Gazprom wrote in its telegram channel: “Siemens takes part in repair work in accordance with the current contract, detects malfunctions, signs an act on the detection of oil leaks, and is ready to fix them. There’s just nowhere to repair it.”
The euro is trading below parity against the dollar, even as expectations rise that the European Central Bank will raise rates by 75 basis points on Thursday (September 8). You need to follow the news background from China on the corona and Nord Stream 1.
Cryptocurrency, of course, does not depend on the global gas market, but since it has taken root in the global financial system, now any significant events in the market are taken into account by investors. I repeat. If the $18-19 thousand zone does not resist, then a new wave of cryptocurrency sales will begin in search of levels where to take a wait-and-see position before the US Federal Reserve meeting.
There are two scenarios
ENCRY Foundation
Now, Bitcoin has been trading in a narrow range between $19.5 thousand and $20.5 thousand for several days now. Typically, such a consolidation is followed by either a bull attack or a bear attack – that is, either a sharp increase or a sharp fall.
There are two scenarios: if bitcoin manages to break out of the above indicated range and gain a foothold above $20.5 thousand for a couple of days, then, most likely, we can talk about growth to $23-24 thousand in a short period (literally a day or two). Similarly, I see a negative scenario – if bitcoin does not stay in the range of $19.5-20.5 thousand and breaks through the lower bar, then we should expect the rate to fall to $17 thousand, and in the long term 7-10 days after that – and to $15,000 because the collapse will trigger a panic sale.
It is difficult to say in which direction the crypto market will turn this week, because the main factors are the data on the state of the American economy – the inflation rate, the key rate, and so on. And these figures are unlikely to change this week: consumer price data for August will be published on September 13, and the next meeting of the US Federal Reserve is scheduled for September 20-21.
The “merger” in the Ethereum network, which is also likely to have an impact on the entire crypto market, will not take place until next week. That is, most likely no significant changes in the exchange rate are expected this week – bitcoin will continue to trade around $20,000.
However, there may still be changes if the market is shaken by some significant news – for example, a new investigation into Tether is launched or the FUD around Binance intensifies.
