Bitcoin Analysis – Support with Feet of Clay?

Bitcoin Analysis – Support with Feet of Clay?

While many investors were hoping for a clarification on a possible pivot of monetary tightening from the FED, it was a huge disappointment at last Wednesday’s meeting. Because by opening the way to new rate hikes to fight inflation, the downward momentum on all risky asset classes since mid-August could continue. Not to mention that the reductions in its asset balance sheet potentially equate to another 1% rate hike.

Nevertheless, Bitcoin once again preserved $20,000. And as we speak, the latest technical analysis shows that prices have been yo-yoing around this critical support for the past few weeks. It makes you wonder if the sellers would start to doubt. Or they would wait for the ideal catalyst to finally cause a third wave of correction.

In a market context full of uncertainties, it would seem that the bear market of BTC since its last ATH in November 2021 would show a desire to regain its rights. So much so that the $20,000 would sooner or later become a support with feet of clay.

Bitcoin – BTC bends but does not break

At the start of the week, we left Bitcoin not far from its lows for the year. And heading into the weekend, the downside pressure eased momentarily as we wait for new catalysts. That being said and without using the conditional, we can’t help but think that the technical rebound since mid-June is a thing of the past. Now, the bear market rally would be in the starting blocks.

Weekly Bitcoin Price Analysis - September 23, 2022

Obviously, this would not be the opinion of many cryptocurrency investors. The latter would like yet another false start. Unfortunately, if we look with humility at the weekly chart, it is clear that this would not plead in their favor.

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First of all, Weinstein’s phase 4 rightly contradicts them. Especially since BTC prices remain far from the 30-week moving average (MM30 weekly), which itself slipped below the resistance of $30,000. Secondly, the downline remains intact until proven otherwise. And lately, technical indicators are holding back their progress towards their respective waterlines.

Synthetic, the threat below $20,000 would increase if these unfavorable technical signals were to worsen. To see more clearly, let’s analyze the daily chart of Bitcoin to detail the possible scenarios both up and down.

Bitcoin – Prices flirt with $20,000 but for how long?

By dint of hanging around the $20,000 support, Bitcoin will have to decide to take a clear and precise direction. In its bear market since its last ATH in November 2021, sellers still remain in a position of strength. Besides, they could feel comfortable.

Daily Bitcoin Price Analysis - September 23, 2022

Indeed, the MACD and the RSI find themselves respectively again below the zero line and the neutral zone at 50 in daily units. This explains in parallel the inability of BTC prices to escape from this critical threshold. And as a result, we’re seeing a dry spell in the buying crowd whether you like it or not.

Assuming that the $20,000 support would irretrievably give ground, we observe that there would not be a solid floor until the support at $12,000 on the weekly chart. This would ultimately lead to a 40% drop. And basically, the Bitcoin bearrun of 2022 would fall within the usual norms of that of 2014 and 2018. But if we have to hold on desperately to something, the $16,000 support would be an intermediate target.

In the opposite case, it would be out of the question to speak naively of a trend reversal despite the possibility of a crossing of the descending line. If BTC prices could rally to $26,000, we would only delay the threat below $20,000. Concretely, to initially neutralize the bear market, the reconquest of $30,000 would prove necessary. But given the current environment, this would be only a slim hope.

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BTC – Bear Market Recovery About to Reclaim?

If during the summer, we avoided the worst for Bitcoin, it was because investors were convinced that the FED had hinted at a slowdown in its monetary tightening in the second half of 2022. Unfortunately, the latter under the leadership of Jerome Powell has always claimed the opposite during the Jackson Hole symposium and the last FOMC meeting.

And as long as US inflation does not come down significantly, we would likely see rate hikes before the midterms and year end. Thereby, Bitcoin, vulnerable to the slightest weakness in liquidity in the financial markets, would remain highly under pressure.

Not only do we have the feeling that the sellers would play for time before driving the point home. But in this sense, the absence of positive catalysts would not facilitate price construction with a view to a trend reversal. Especially since Bitcoin struggles to disentangle itself from its relationship with risky asset classes.

Therefore, the resumption of its bear market since its last ATH in November 2021 would therefore reflect the Don’t fight the FED darker than ever. In which case, make Dollar Cost Averaging (Programmed Investment) could still be expensive for some time.

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