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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. Bitcoinâ€™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. Letâ€™s consider a few reasons in todayâ€™s article as to why that may be the case.
The Rally, The Plunge, and the Slight Relief
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 Possible Reasons Why Bitcoin Bottom May not be in yet
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 BTCâ€™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.
However, on the technical front, BTCâ€™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.
<source: tradingview, coinbase>
If BTCâ€™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.
<source: tradingview, coinbase>
At the macro level, Fedâ€™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 Fedâ€™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.