Bitcoin has updated the price low since January. What will happen next

Posted 09 May, 2022

The price of bitcoin fell to $33.1 thousand. Experts told what to expect from the cryptocurrency market in the coming week.

On Monday, May 9, the bitcoin rate fell to a minimum since January 23 at $33.1 thousand. As of 11:45 Moscow time, the first cryptocurrency is trading at $33.3 thousand, over the past day it has fallen in price by 4%, over the week by 13%.

RBC-Crypto experts analyzed the situation on the market and told what dynamics to expect from it in the short term.

May for bitcoin began with a decline. Increased volatility in the market was observed on Wednesday after the meeting of the US Federal Reserve and the press conference of J. Powell. As a result of the two-day meeting, the American regulator increased the range of rates by 50 bp, to 0.75% - 1.00% per annum. At the press conference, Powell signaled that 50bp rate hikes would also be discussed at upcoming meetings. Thus, the head of the Fed reduced market expectations for a rate hike in June by 75 bp.

The dollar index reacted with a fall. The S&P500 and Nasdaq jumped 3%. Following them, Bitcoin rose by 6.68%, to $40 thousand. On Thursday, May 5, optimism quickly disappeared. The stock market crashed. The tech sector fell the hardest. The dollar index hit a high. Bitcoin fell 11% to $35,000 including Friday trading.

Investors fear that against the backdrop of rising energy prices, inflation will continue to unwind. As a result, the world's leading central banks will accelerate the process of tightening monetary policy through aggressive rate hikes.

On Thursday, sellers managed to break through the daily trend line at $37.6K. The fall accelerated to another trend line originating from the low of $29.2K dated July 20, 2021. The low of $34.3K dated February 24, 2022, was held. On Friday, American stock indices tried to rebound. Along with them, the cryptocurrency recovered slightly. The rebound is weak. The S&P500 and Nasdaq closed in the red.

American indices may continue to decline against the backdrop of QE curtailment and rate hikes. I am also worried about another point - the growth in the yield of US government bonds against the backdrop of their sale. It became known that in March-April, China "dumped" bonds worth $150 billion. According to the latest TIC report, China owned US debt in the amount of $1.054 trillion in February this year against $1.100 in March 2021. After the US and the EU froze the gold reserves of Russia, many Central Banks began to reduce the share of the dollar and treasuries in their reserves. And rising yields are the future of rate hikes and a stronger dollar.

Conditions for the cryptocurrency market remain bearish. Levels below $30,000 per bitcoin loomed on the horizon. Now the market is under serious pressure from the news of the US stock market. We monitor the cryptocurrency market and simultaneously analyze the S&P500 and Nasdaq.

A new local trend began to form on the chart. The trends that have persisted over the past 4 weeks have been broken. Therefore, today the share of uncertainty in the market is the highest. Further development of events this week can go according to two scenarios.

The first scenario implies a quiet week - the most likely is the preservation of current levels or a slight corrective growth. Accordingly, the expected price range for such a plan is approximately $33.5-36 thousand.

Confirmation of this scenario can be considered a noticeable increase in “open interest” in the futures market since the last rapid fall while maintaining the balance of short and long positions in relative equilibrium, which reduces the likelihood of a price decrease with a manipulative nature.

At the same time, if we evaluate the totality of popular indicators of technical analysis, then for the most part, due to the recent "breakthrough of the trend", they indicate the continuation of this fall. Based also on the short-term history of recent months, after a short lull, we can expect a sharp downward impulse to repeat in the second half of the week by about 10% from current levels to the $31-32 thousand zone.

We do not observe serious fundamental prerequisites confirming this or that scenario on the market, therefore we rely solely on technical analysis to assess short-term prospects. In summary, we should expect a stable slow growth until the middle of the week, count on a powerful “rebound” of the current fall to $36 thousand, but be prepared for a sharp continuation of the fall. It should be borne in mind that when the price drops below $33.5 thousand, a fall is most likely, so it is worth indicating “stop-loss” orders for long positions around this mark.


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