Bitrabo Editorial
The crypto market has been experiencing a period of stagnation with Bitcoin(BTC) and other major cryptocurrencies trading sideways, unable to break below support or above resistance levels. According to a recent report, a decline in volatility has preceded the low action, but this could change in the short term.
At present, Bitcoin trades at $26,700, representing a 2% loss in the last 24 hours and a 4% loss over the previous week. Other assets in the top 10 by market capitalization are experiencing similar price action.
Macro Factors Influencing Bitcoin Price
Crypto research and analysis firm, Blofin, report that macroeconomic factors have been impacting the price of Bitcoin and larger cryptocurrencies. Two narratives have been influencing this area: debt ceiling in the United States and inflation.
The former was resolved as key actors in the US reached a compromise, but the latter remains the core issue for macroeconomics. Blofin claims that central banks worldwide are likely to continue hiking interest rates, which could impact Bitcoin, Ethereum, and the crypto market. The nascent sector may experience low volatility while BTC re-tests critical support levels. Blofin states that the upcoming events that could provide insight into central banks’ next actions include:
(…) the Fed will raise rates once before July. This week’s Bank of Canada interest rate decision may give us some signals, but judging from the current movements of cryptos, the signals may not be good.
Another analysis by a pseudonymous crypto investor claims that BTC’s Open Interest (OI) is reaching levels last seen when prices cleared out overleverage positions. Consequently, BTC may exit its crab mode to take out liquidity across the board. Open interest in itself says nothing about direction.
The Possible Effects of a Bitcoin Crash
If there is a sudden spike in volatility downwards, Bitcoin could retrace to the 200 weekly moving average, according to Material Indicators’ Keith Alan. The analyst suggests that if BTC closes below this level, which is $26,000, it could experience further downside. The last line of defense is at the 50-Month MA around $25.5k.
Cover image from Unsplash, chart from Tradingview