Bitcoin (BTC) dipped below $21,000 for the first time in eight days on July 26, as Wall Street braced for a decision on US anti-inflation policy.
Fed jitters test market resolve
Data from Cointelegraph Markets Pro and TradingView showed that the BTC/USD pair ended a period of sideways action at the open on Wall Street, hitting lows of $20,788 on Bitstamp.
Compared to its highs of $24,280 on July 20, the pair has lost more than 14%, while the nerves of risk assets have increased in anticipation of the Federal Reserve’s interest rate decision on July 27.
The higher the base rate hike by the Fed, the more problematic the outlook becomes for crypto investors, as further tightening would mean more dovish conditions prevail across the economy.
“BTC has lost the higher low, which represented a technical uptrend on the lower timeframe,” said to your Twitter followers along with an illustrative graphic.
At the macroeconomic level, The International Monetary Fund (IMF) published its World Economic Outlook for July 2022, in which it forecast a significant slowdown in global growth, which should average 3.2% this year and 2.9% in 2023.
“Recession risk is particularly prominent in 2023, when growth in several economies is expected to bottom out, household savings accumulated during the pandemic will have dwindled, and even small shocks could cause economies to stall,” it said.
“For example, according to the latest forecasts, the United States will have real GDP growth of only 0.6% in the fourth quarter of 2023 on a year-over-year basis, which will make it increasingly difficult to avoid a recession.”
Looking at daily time frames, popular trader and analyst Rekt Capital warned that with the Fed event yet to come, Bitcoin had already lost its uptrend.
“BTC has missed the higher low, which represented a technical uptrend on the lower time frame”, said to his Twitter followers that day.
“The trend has changed.”
In another post, the current pullback was described as the logical aftermath of Bitcoin giving up its 200-week moving average level as support after briefly recovering last week.
Este #BTC pullback is the technical aftermath of rejecting from the 200-week MA after a Weekly Close below it$BTC #crypto #bitcoin pic.twitter.com/SRl2Qlcdp3
— Rekt Capital (@rektcapital) July 26, 2022
This BTC pullback is the technical fallout from the rejection of the 200-week MA after a weekly close below $BTC itself.
“Patience is a virtue,” continued fellow analyst Anbessa.
“Wait for a reversal pattern to re-enter. There is no setup for an entry at $21,600 so we remain patient.”
Anbessa further said that “there is no need for FOMO” in the markets at current prices.
Are you still waiting for the million dollars?
Others had reason to be cautiously bullish on Bitcoin, with conviction rising in line with timeframes being watched.
“The volatile week is unfolding as expected,” continuous IncomeSharks. In a more optimistic forecast, IncomeSharks said it would see a price of $30,000 “within a few months.”
“Now is not the time to get bearish and sell, that was last week,” he added.
PlanB, the creator of Bitcoin’s Stock-to-Flow pricing models, meanwhile, maintained that the BTC/USD pair could still trade as high as $1 million in 2027.
At the same time, he predicted on the day that US stocks would reach new heights never seen before.
Some of you are afraid of macro and the link between bitcoin and stock markets etc.
IMO the next ~5 years S&P500 will be in the $5K-$6K range and bitcoin in the $100K-$1M range. Short term is noise, long term is signal. pic.twitter.com/rhz4cigHRc— PlanB (@100trillionUSD) July 26, 2022
Some are afraid of the macro and the relationship between bitcoin and the stock market etc.
In my opinion, in the next 5 years the S&P500 will be in the range of $5,000 – $6,000 and bitcoin in the range of $100,000 – $1M. The short term is noise, the long term is signal.
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