Mapping Out Key BTC Scenarios

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The Bit­coin price crashed to an impor­tant sup­port lev­el on Thurs­day morn­ing as investors reflect­ed on the lat­est FOMC min­utes. BTC is trad­ing at $43,110, which is the low­est it has been since Decem­ber 5th. It has fall­en by more than 30% from its high­est lev­el on record.

The biggest rea­son why the BTC price has crashed late­ly is that investors are no longer fight­ing the Fed. In its Decem­ber meet­ing, the Fed warned that it will imple­ment three rate hikes in 2022. Before that meet­ing, the Fed had hint­ed that it will start hik­ing in 2023. 

The FOMC pub­lished its min­utes on Wednes­day and investors freaked out. They dumped cryp­tocur­ren­cies, push­ing their mar­ket cap­i­tal­iza­tion to about $2 tril­lion. They also dumped high-growth stocks, lead­ing to a 500 point decline of the Nas­daq 100 index.

His­tor­i­cal­ly, risky assets like cryp­tocur­ren­cies and high-growth stocks tend to fall in a hawk­ish envi­ron­ment. This explains why they did well when the Fed low­ered rates and then imple­ment­ed an open-end­ed quan­ti­ta­tive eas­ing policy.

Bitcoin price analysis

The dai­ly chart shows that the Bit­coin price has been in a strong bear­ish trend in the past few weeks. A clos­er look at the chart shows that it has formed a head and shoul­ders pat­tern. Indeed, it is cur­rent­ly trad­ing at the neck­line of this pat­tern. It has also moved below the 25-day and 50-day mov­ing averages. 

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There­fore, there is a pos­si­bil­i­ty that the BTC price will keep falling in the near term. If this hap­pens, the next key lev­el to watch will be at $40,000.

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Still, there is an alter­na­tive sce­nario since the coin seems to have formed a dou­ble-top pat­tern whose neck­line is at $52,177. There­fore, while signs are that the coin will decline, a bull­ish come­back can­not be ruled out.

Bitcoin Price



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