In which case the rate of the first cryptocurrency may collapse to $ 12 thousand, and under what circumstances investors will have the opportunity to reverse the downward trend
On Sunday, August 28, bitcoin is trading at the level of $ 20 thousand. Over the past week, the first cryptocurrency has fallen in price by 5%. On Saturday, the asset exchange rate updated the local minimum at $19.8 thousand.
Experts explained the reason for the decline in the price of bitcoin and talked about its short-term prospects.
“Buyers will have the opportunity to reverse the bearish trend”
During the week from August 22 to 28, the BTC/USDt pair traded most of the time in the price range of $20.7—21.9 thousand. At the beginning of the week, investors focused on the annual economic policy symposium in Jackson Hole. They were looking forward to the performance of J. Powell’s at the end of the week. His speech could lead to a revision of expectations on the dynamics of the Fed’s key rate, so activity in all markets was low until Friday 17:00 Moscow time.
The US dollar drew strength from the weakening of the single currency and also had a negative impact on the cryptocurrency market. The price of gas in Europe rose to $3.54 thousand per thousand cubic meters. The auction ended at $3.16 thousand. Due to the energy crisis in Europe, gas prices are rising in Asia and the United States. All this leads to the unwinding of inflation in the world. And as we know, the US Federal Reserve is fighting inflation by raising rates. Everything is interconnected in the world.
On Friday, August 26, at the end of the day, bitcoin fell by 6.11%, to $ 20.2 thousand. High volatility in the market was observed closer to the opening of the American session. Before the speech of Fed Chairman Jerome Powell, the bitcoin exchange rate rose to $21.8 thousand. Approaching the resistance of $21.9 thousand, the price fell by 8% to $20.1 thousand. The ether rate sank by 12.8% to $1.4 thousand. from his resistance.
The cryptocurrency turned down amid the flight from risky assets and the recovery of the US dollar after Powell’s speech. The S&P500 index fell by 3.46% to 4,053.65 p., the Nasdaq — by 3.94% to 12,141.71 p. The dollar index (DXY) regained its daily losses, rising to 108.75 points without continuing the rally.
The head of the Federal Reserve, Powell, at a conference in Jackson Hole, said that the US economy will need a tight monetary policy “for a certain period of time” before inflation is brought under control. The regulator also expects a deterioration in labor market conditions. He gave no hints about what the Fed will do at the September 20-21 meeting. He was as tough-minded as his colleagues.
Powell didn’t say anything new. Everything was said by his colleagues earlier. Officials can approve a rate increase of 50 or 75 basis points. Fed interest rate futures after his speech began to show higher chances of a third consecutive rate hike by 75 basis points.
From the speech of the head of the Fed, it is clearly clear that the fight against inflation is more important than supporting the growth of the US economy. It is unclear what the trajectory of a rate hike in 2023 might look like. Fed officials say they will closely monitor upcoming economic data when making their decisions.
After the Jackson Hole symposium, the technical picture worsened for bitcoin. Sellers broke the trend line from the low of $17.6 thousand (June 18, 2022). Now the road is open for them to support $ 18-19 thousand.
The downward movement from the top of $25.2 thousand to $19.9 thousand has a completed three-wave structure. The first descending wave is larger than the last. If buyers could accelerate the price up over the weekend to test the level of $22 thousand, then the level of $25 thousand would appear on the horizon again. This is a graphical analysis, and we are well aware that on Saturday and Sunday, buyers will not buy the fall without bullish signals. Stock indexes closed lower.
For an upward rebound, there is another interesting graphical model — three descending bases to the $18 thousand — $19 thousand zone in the form of a wedge. With a sharp rebound in this model, a “double bottom” will form. So buyers will have the opportunity to reverse the bearish trend and cause a “crypto spring”.
If aggressive sales begin on Monday, and the $18-19 thousand zone does not stand, then we can consider a downward movement in the form of two three-wave structures with a goal of $ 12-12.5 thousand. The success of sellers will depend on the injection of “horror stories” by foreign media about high inflation and recession in the United States in order to collapse the American stock market.