"The situation remains critical." What will happen to bitcoin next week

Posted 23 May, 2022

On Monday, May 23, the bitcoin rate reached $30.6 thousand. As of 13:05 Moscow time, the first cryptocurrency is trading at $30.4 thousand, over the past day it has risen in price by 1%. Over the week, the value of the asset fell by 3%.

Experts told how the situation in the industry will change next week.

Bitcoin is trading in the red for the eighth week in a row. Total losses were 39% and 44.59% to a low of $26.7K. The correlation of the first cryptocurrency with the S&P500 index is 0.78 and 0.75 for 30 and 90 days, respectively (indicators are inaccurate since the cryptocurrency is traded on the weekend).

The cryptocurrency market remains dependent on the US stock market. The stock market is storming due to the tightening of the monetary policy of the US Federal Reserve. The regulator fights high inflation by raising rates.

At the end of the week, the S&P500 and Nasdaq Composite also recorded the seventh negative week in a row. The series is the longest since the end of the dot-com bubble in 2001. On Friday, the US dollar corrected slightly against world currencies but is still trading at maximum levels.

The BTC/USDT pair is trading near the trend line, which was drawn through the lows of $3782 (March 13, 2020) and $10,136 (September 23, 2020). Its puncture took place on May 11-12, 2022. Against the backdrop of a rebound in the indices, buyers protected the $28.5-29.5 thousand zone, but are still vulnerable to a further fall to the $20 thousand level. Demand for risky assets is unlikely to return in the near future.

On Friday, the S & P500 index won back all the losses and closed in a meager plus at 0.07%. The rebound gave hope to buyers on the crypto market over the weekend to return to $30.2 thousand. The situation for cryptocurrencies remains critical. Buyers are practically hanging by a thread. The “bearish” trend is intensifying and you don’t know where the support for traders and investors will come from, or what news will trigger a new rally in the stock and cryptocurrency markets.

The crypto market is under pressure from macroeconomic factors. In particular, high growth rates of consumer prices in the world and in the USA remain. The situation was also affected by the collapse of the algorithmic stable coin UST, which many analysts compare with the fall of Mt Gox, which launched a long recession in the crypto market.

It is unlikely that bitcoin will be able to overcome the negative factors and move into the growth stage in the coming months, not just weeks. In June, the Fed's rate is expected to rise again, which means that investors, against the backdrop of geopolitical instability and high inflation, will further increase investments in such protective assets like US Treasury securities, whose profitability will increase due to the increase in the key rate.

At the same time, the crypto market is heterogeneous: there is bitcoin, but there are altcoins. And in the current conditions, there is a flow of capital from altcoins back to bitcoin, whose market share has again moved to growth. This means that crypto market participants are looking for ways to reduce the risks of depreciation of their portfolios and transfer assets from riskier to less risky - Bitcoin is traditionally less risky than altcoins and more survivable.

In the coming weeks, I expect bitcoin to trade in the range of $25,000 to $30,000, while it is unlikely that bitcoin will be able to gain a foothold even above $30,000. More negative scenarios are not excluded when bitcoin falls to $22,000.

Now the nearest support level, at which volume buy orders are visible, is $20-$22 thousand. It will be difficult for bitcoin to fall below these marks, but again, it is not impossible. If the rate of the first cryptocurrency goes below $25,000 and consolidates there, then it is possible that Bitcoin will go into free fall, when the rate will quickly break through the support at $20,000 and go lower.

A new Bitcoin bull cycle is unlikely in the coming months. There is a chance that in the second half of 2022, bitcoin will be able to overcome the negative information and macroeconomic background and grow, but this growth is unlikely to bring it above $45,000. Even this mark seems optimistic to me.

 

Previous forecast

24 May, 2022 08:12

← Forecast EUR/USD. A corrective decline is about to begin

The price, as expected, continued to grow and was able to set another local maximum.

Forecast EUR/USD. A corrective decline is about to begin

Next forecast

06 May, 2022 08:37

GBP/USD Forecast. Downward movement may end soon →

Unlike the euro, the pound failed to stay within the previously reached values, which ultimately led to the establishment of another minimum.

GBP/USD Forecast. Downward movement may end soon
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