Over the past week, the bitcoin exchange rate has increased by 2%, to the current levels of about 29.6 thousand USD. The first cryptocurrency continues to trade in a narrow range for a month. Experts of RBC-Crypto told how the dynamics of the asset will change in the coming days and what factors may affect it.
The bitcoin exchange rate may drop to 20 thousand USD
The capitalization of the CFA market continues to remain low, and next week we may see another wave of decline in prices for digital assets. The medium-term downtrend on BTC and ETH continues, and I have not yet observed the beginning of the bottom formation. Against this background, the bitcoin exchange rate may drop to the level of 20 thousand USD, and ETH to the level of 1.4 thousand USD.
Fundamentally, investors are now under pressure from the beginning of the process of quantitative tightening by the US Federal Reserve, which becomes visible on the balance sheet charts, which indicates the implementation of the $9 trillion liquidity reduction plan announced last year. Next week, US inflation data will be released, which may make adjustments to the QT process if they turn out to be worse than forecasts, but so far everything is going to the fact that inflation in the US is slowing down in response to the Fed's actions, and therefore the tightening of the PREP will continue.
At the same time, the decline in stock markets, taking place against the background of changes in the PREP and inflationary pressure in the Western economy, is obviously not over yet and will put pressure on the cryptocurrency market, among other things.
"It's worth getting ready to update multi-month lows"
During the trading week from May 30 to June 3, the bitcoin exchange rate was trading in the range of 29 thousand USD — 32.4 thousand USD. The week started with a good growth of 7.69%, to 31.7 thousand USD. In the United States, it was a day off on the occasion of a national holiday, so buyers used the increase in futures for the S&P500 and Nasdaq indices as a guideline. After the breakdown of the intraday resistance of 30.7 thousand USD, the price rose to 32.3 thousand USD.
On Wednesday, bitcoin lost all profits. The trigger for the sale of cryptocurrencies was the fall of the S&P500 and Nasdaq indices, as well as the strengthening of the dollar. Bitcoin sales increased after the breakdown of 31.2 thousand USD.
The US dollar has risen in price against the world's largest currencies against the backdrop of rising yields on 10-year US government bonds. Investors began to consider again for June the scenario of an aggressive increase in US Federal Reserve rates by 75 bps.
The Fed has published a Beige Book for June, which reflects the continued growth in all districts. Most of them noted a small or moderate growth. U.S. manufacturing activity grew faster than expected in May as demand for goods remained strong, easing fears of an impending recession.
By the end of the week, negative sentiment on risky assets remained. The S&P500 and Nasdaq indexes returned to Monday's levels. The price of bitcoin has returned below the 30 thousand USD mark, the "bearish" signal continues to form clearly.
The US dollar rose against a basket of currencies on Friday after the US employment report was better than expected. The situation on the labor market is one of the key factors influencing the decisions of the Federal Reserve in terms of monetary policy. With high inflation and a good NFP report, the Fed will continue to raise rates.
The situation on bitcoin remains tense. Due to the fact that at the beginning of the week, buyers updated the maximum from May 15, 2022, and the price returned to the level of 30 thousand USD, a "bearish" model is being formed on the market.
It was not possible to gain a foothold above 31.7 thousand USD. If over the weekend buyers will not be able to protect the level of 29 thousand USD and return the price to the area of 31 thousand USD, then it is worth preparing for the renewal of multi-month lows. It is enough for sellers to hook stops on long positions below 28 thousand USD and a new sale of cryptocurrency will begin, triggering liquidations on coin futures. The goals for "cryptomishek" are in the range of 20-23 thousand USD.
Cycle analysis still shows a growth phase from May 30 to June 6. The crypto market cannot get rid of stock indexes, so they will remain a compass for crypto investors for the summer months. The dynamics of the S&P500 and Nasdaq, as well as macro statistics for the United States will continue to have a strong impact on the crypto market.