06/09/2023
The world's largest cryptocurrency, Bitcoin, has been trading in a bearish market as the broad-based US dollar maintains strong positive traction. Bitcoin has dropped nearly 6% in the last 24 hours and more than 8% in the previous seven days and appears to be losing value among investors for different reasons.
A bearish trend in the price of Bitcoin could be attributed to the performance of the American stock market, which has been affected by concerns that the Federal Reserve will continue to raise interest rates. This drives a "risk-off" sentiment as investors withdraw funds from riskier assets such as stocks and Bitcoin. The NASDAQ 100 and S&P 500 both fell due to the strengthening of the dollar, putting bearish pressure on Bitcoin.
Furthermore, Russia's shutdown of the Nord Stream 1 pipeline aided the Bitcoin price decline, which halted gas flow to Europe and spooked the markets. Rising bond yields were also key in keeping BTC prices under pressure. If such patterns continue, the price growth of the Bitcoin (BTC) coin could be significantly bearish in the coming year.
With stronger-than-expected US manufacturing statistics adding to concerns that central banks would need to hike interest rates rapidly to rein in inflation, the bond market sell-off shows no signs of abating.
In a move not seen since mid-June, US 10-year bond yields rose 6.1 basis points to 3.25 percent. As a result, investors prefer to invest in risk-free assets, putting downward pressure on Bitcoin prices.
The broad-based US dollar has turned green and reached a new 20-year high. However, the reason could be attributed to the Fed's strong expectation of adopting an aggressive stance, which aided the value of the US 10-year Treasury Bills.
Bitcoin's price, which has a strong inverse relationship with tech equities and the tech-based NASDAQ, has also fallen. According to a Bloomberg article, the Fed's aggressive moves may become much more forceful. Fed Chair Jerome Powell appears to be following in the footsteps of the late Paul Volcker. Volcker's hawkish stance on inflation is most likely what pushed the US economy into a slump.
If the Fed maintains its quantitative tightening, the broad-based US dollar could gain traction and reach new highs. In his speech in Jackson Hole, Powell reiterated his desire to strengthen the dollar to combat inflation.
If Bitcoin prices continue to fall, they may reach deficient levels. Richard Heart, a major crypto influencer, predicts that Bitcoin will drop to $11,000 before rising. At the time, investors' attention was focused on the release of CPI data on September 13.
The leading cryptocurrency pair BTC/USD is on a bearish run, dropping from $20,000 to $18,750. On the daily timeframe, the BTC/USD violated the triple bottom support level of $19,053. The closing of the bearish engulfing candle under the $19,053 level could potentially drive further bearish trends in Bitcoin.
As we can see, the BTC/USD pair has violated a symmetrical triangle pattern on the lower side, signaling a strong selling bias among investors. On the downside, the BTC/USD pair's immediate support prevails at the $17,685 level, and a breakout of this level could open up further room for selling until the $16,450 level.
It's likely to be challenging for BTC to retake $20K unless it breaks above the $19,500 resistance level. A surge in Bitcoin demand can slice through $19,500, and the BTC price can surge towards the $21,900 or $22,425 resistance levels.
