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After a month-long uptrend, Bitcoin (BTC) has receded again, shedding its gain after getting rejected at the crucial $25,000 resistance last week. Bitcoin’s prospects at establishing an uptrend, which looked promising two weeks back, are in the shadows as experts cite that Bitcoin bottom may not be in yet. Let’s consider a few reasons in today’s article as to why that may be the case.
From the June bottom near $17k, BTC had surged upwards and remained above the $22k support all through August until last weekend when the prices plunged below the same. BTC attempted to break past the $25k resistance several times but could find momentum to go beyond $24,880. The rejection at $25k caused BTC to shed its gains and slump further down. At the time of writing, BTC was trading at $21,160, down by 1.3% from the previous day and by 12% in the past seven days.
The $551 million worth of Friday liquidations in the crypto market caused massive corrections, and BTC faced its worst since mid-August. Hash Ribbons, an on-chain indicator used for tracking BTC’s hash rate, reveals that miner capitulation may be over for the first time in over a year, which could possibly trigger a positive momentum again.
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<source: glassnode>
However, on the technical front, BTC’s price is forming a rising wedge pattern and may be in for a squeeze-out below the pattern, pointing to even more losses for BTC in the coming weeks. A rising wedge pattern is a bearish pattern that indicates losing momentum and often results in the price rise contracting and finally breaking below the pattern. BTC has been forming a rising wedge pattern since mid-June.
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<source: tradingview, coinbase>
If BTC’s bear market history is taken into consideration, the current state of affairs mirrors the brief relief rallies BTC witnesses during such phases, as shown in the figure below.
.jpg?w=640&auto=format%2Ccompress)
<source: tradingview, coinbase>
At the macro level, Fed’s interest hike remains the prime mover of global financial markets, and so the case for crypto markets is no different. In June, BTC bottomed at $17,500 after rising by 45% due to investor expectations around a cut in interest rates amidst growing inflation. However, the Fed hiked the interest rates, and BTC was hit badly. The interest hike is being anticipated further if we consider Fed’s commitment to bring down inflation rates back to 2% from the current 8.5%. The riskier assets, including BTC, will remain under pressure for quite some time.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.