Bitcoin (BTC) price action has been surprisingly bullish since May 27. On weekends, especially on bank holiday weekends, they are notoriously volatile and indecisive, with large price swings being common. Even in bull markets, bearish price action is often the norm, but BTC bucked that trend.
Bitcoin rose almost 11% between May 27 and 30, breaking through the critical level of $28,600 to break back above $30,000 to $31,700. The weekly close was the highest in twenty days and provided the bulls with the longest three-day streak in over two months. However, macro fears may weigh on any further upside potential.
Fears of global food shortages rise as commodity prices rise
The global food supply is a primary, yet easily overlooked, factor contributing to bitcoin’s future price potential. Since the start of the COVID-19 pandemic, governments around the world have closed their ports and airports, cutting off and disrupting the flow of goods. This outage will take years to get back to normal, but that’s not the main cause for concern.
In the United States, fertilizer costs have increased exponentially in the last 18 months. In January 2021, the Fertilizer Price Index was at USD 78.83 and today it is at USD 254.97, which is an increase of almost +225%. A combination of supply chain disruptions and ongoing shortages are likely to continue to disrupt this market.
Commodity prices continue to rise and are one of the main reasons for the constant increase in inflation. In particular, wheat (CBOT: ZW) hit new all-time highs in February 2022 and remains close to those all-time highs. In 2022 alone, wheat futures are up as much as 76% and more than 143% in the last 18 months.
Oil futures (NYMEX: CL) continue to rise and are now trading at levels not seen since July 2008. Traders and investors are concerned about the possibility of oil approaching $150 a barrel once China ends its COVID lockdown. When this happens, demand will certainly return and will have a greater impact on oil.
Concerns about growth in the stock market
Equity markets around the world remain under significant pressure. Rising inflation, rising commodity costs, supply chain disruptions and the conflict in Ukraine have put risk-taking investors and traders on the defensive.
Several big-hitting economic events are scheduled for this week, which are likely to curb any major price movements in equities and cryptocurrencies. Unemployment data from the European Union will be released on June 1, along with the Bank of Japan interest rate decision and manufacturing data. In addition, US unemployment figures and non-farm payroll data will be released on June 3.
On June 3, three former US Federal Reserve residents will also speak: John Williams and James Bullard will speak on June 1, and Lael Brainard on June 3.
Technical Levels May Limit Bitcoin Recovery to $37,000
Bitcoin is coming off a new all-time high of nine consecutive weekly losses. Since the start of the current weekly candle, the buyers have come back and pushed BTC above the entire trading range of the last two weeks and well above the 50% range of the flash crash on the candle. weekly from May 9, 2022.
If Bitcoin price can close above the daily Kijun-Sen at or above $31,350, then BTC has a wide open path to reach the $37,000 value zone. Also, the 2022 volume profile is very thin, between $32,000 and $37,000. But $37,000 may be where the bulls meet the sellers again.
If the bulls want to send a message to the market that a new uptrend is about to start, then they will have to push Bitcoin price to a daily close near $44,000. In that scenario, BTC would trigger an “ideal Ichimoku bullish breakout”, giving the bulls the necessary path to retest the all-time high.
As equity prices remain in bear market territory and commodities remain at record highs, a temporary pullback is likely at the very least. If the old adage of technical analysis, “volume precedes price”, repeats itself, traders should watch food commodities and oil sell off while stocks and Bitcoin rise.
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