Bitcoin (BTC) is entering a new week with a question mark over the fate of the market ahead of another major decision on US monetary policy.
After a successful weekly close – its highest since mid-June – BTC/USD is getting more cautious as the Federal Reserve prepares to raise benchmark interest rates to fight inflation.
While many had hoped that the pair could break out of its recent trading range and continue higher, the Fed’s heft is clearly visible as the week begins, adding pressure to the already fragile risk assets landscape.
This fragility is also shown in the fundamentals of the Bitcoin network as the mining strain becomes real and the true cost of mining through a bear market emerges.
At the same time, there are encouraging signs from some metrics on the chain that long-term investors are still refusing to give up.
Cointelegraph takes a look at the market drivers of the week in a tense week for cryptocurrencies, stocks, and more.
Fed makes decision on next rate hike in ‘another fun’ week
Story of the week, all things being equal, there is no doubt that the Federal Reserve raised interest rates.
A familiar anecdote, the FOMC on July 26-27 will see policy makers decide the next rate move. It is likely to be either 75 or 100 basis points.
Inflation in the United States, as in many jurisdictions, is at its highest level in forty years, and its advance appears to have surprised the establishment as calls for a peak have been met with even greater gains.
“It should be another fun thing to do,” William Clemente, principal analyst at Blockware Insights, summed up on July 25.
The interest rate decision is scheduled for July 27 at 2:00 PM ET, a diary date that could be accompanied by increased volatility across risky assets.
One analyst warned that this is likely to be exacerbated, thanks to lower summer liquidity and less conviction among buyers.
“ECB/FOMC/Tech Earnings Enter Amidst Lowest Liquidity of the Year. Market is Back in Overbought Zone. Mac10 Twitter account wrote, “Bulls, let it ride.”
One of the previous publications also pointed to second-quarter earnings reports as likely to contribute to a downward movement in line with previous behavior.
“Bitcoin Assets and Risk Rises Up at FOMC Events This Year, Only to Sell Then, Is It Different This Time?” Follow the Tedtalksmacro Peer Analysis account:
“The June FOMC meeting saw the US Federal Reserve raise 75 basis points – the largest single rise since 1994. Significant hikes are expected before inflation ‘normalises’.
The week already appears to be different from last, even before events even begin to unfold – Asian markets are flat compared to last week’s bullish tone, which accompanied the recovery across Bitcoin and altcoins.
While one argument is that the Fed cannot raise interest rates much more without hurting the economy, meanwhile, Tedtalksmacro has pointed to the labor market as a goal to keep rates high.
“Bitcoin will struggle to cross 28K until the data deteriorates,” he added.
Spot price failed to fix the main moving average
Bitcoin’s recent weekly close was a halfway house for the bulls, data from Cointelegraph Markets Pro and TradingView show.
While managing its best performance in over a month, BTC/USD lost ground to a reclaim of the basic 200-week moving average (MA) at $22,800.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
After the close, which came in at around $22,500, Bitcoin has started to drop below its recent trading range, still remaining below $22,000 at the time of writing.
“Watching if we find support at $21,666 horizontally. Patience,” famous trader Anbisa told his Twitter followers in his latest update.
In the meantime, a colleague Crypto Chase account suggested that a return to the 200-week moving average would lead to a further modest rally.
Chopping around the daily S/R (red square) with the inability to flip 22.8K (daily resistance) support. Written next to the explanatory charts: Multiple attempts to do so, but so far unsuccessful:
“If the price goes higher again and finds acceptance, I would watch 22.8K become support for a potential buy entry to 23.2K.”
The subsequent update viewed $21,200 as a possible bearish target, and this is also a support/resistance level on the daily chart.
However, at $21,900, bitcoin is still around $1,200 higher against the same point last week.
BTC/USD 1-week candlestick chart (Bitstamp) with a 200-week moving average. Source: TradingView
Elsewhere, recent price action hasn’t been enough to change long-term views. For Venturefounder, a contributor to on-chain analytics firm CryptoQuant, the bottom of the macro has yet to appear, and it is likely to reach $14,000.
“Consistent with previous halving cycles, this is still my most viable prediction for Bitcoin ahead of the next halving: BTC will give up in the next six months and hit the bottom of the cycle (anywhere between $14-21K) and then break out at 28-40K. dollars at most in 2023 and will be at ~40 thousand dollars again by the next half,”
Difficulty returns to March levels
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