Bitcoin prices have fallen this year amid a risk-asset selloff
Rebounding of Bitcoin
Bitcoin prices are rebounding on Tuesday. After trading around their lowest levels in more than a month over the course of the weekend. BitcoinBTCUSD +0.98% and other cryptocurrencies were rebounding on Tuesday. However, prices continue to fall, and investors are keeping a close eye on Bitcoin. As it approaches a significant level in anticipation of a buying opportunity.
The price of Bitcoin rallied from Monday’s low of $19,550, which was the lowest level since the middle of July, to rise 3% over the past 24 hours and reach above $20,400. This is the highest it has been since mid-July. Bitcoin was trading close to $22,000 prior to a widespread selloff that began on Friday and was sparked by a speech from the Chairman of the Federal Reserve, Jerome Powell.
“Macroeconomic uncertainties continued to weigh on the price of Bitcoin,” said Joe DiPasquale, the CEO of crypto fund manager BitBull. “We will be watching for the market’s reactions to new lows and aiming to accumulate Bitcoin between $20,000 and $15,000.”
Cryptos plunged in recent days
Following the worst session for the Dow Jones Industrial AverageDJIA –0.57% and S&P 500SPX –0.67%. In months following Powell’s speech at the Jackson Hole economic summit. Cryptocurrency prices have been falling in tandem with stock market values over the past few days. The message that delivers by the head of the central bank was that the Federal Reserve would not back down from its goal of taming inflation through higher interest rates, despite the possibility of a recession.
Bitcoin and other risky bets, such as technology stocks, which are highly tie up with cryptocurrencies. It will suffer in an environment characterizes by rising interest rates and the possibility of an economic slowdown. Expecting that a recession will further reduce demand for risk assets. Such as Bitcoin because higher interest rates cause bond yields to rise, which in turn lowers the attractiveness of the relative returns offered by risk assets such as Bitcoin.
Now, the head of Galaxy Research, Alex Thorn, point out in a note that was published on Monday that Bitcoin is trading below both its 200-week moving average as well as its realized price. The realized price is the average cost basis for cryptocurrency holders.
“While macroeconomic factors and monetary tightening can cause Bitcoin to trade lower in the near term, for several reasons both technical and fundamental these levels should be considered opportunistic buying opportunities for both medium and long-term Bitcoin investors,” Thorn said.
Trading of Bitcoin Price
The analyst pointed out that Bitcoin’s price has only traded lower than its 200-week. Moving average a handful of times, including during the bear market in 2015. The bear market in 2018/2019, the peak of fear caused by Covid-19 in March 2020. And the period of time beginning in June 2022 and continuing through August.
When questioned further, Thorn stated that “in the past, times when Bitcoin/U.S. dollar trades below its 200-week moving average have proven to be favorable buying opportunities across a range of time periods.”
The leader of Galaxy Research is keeping an eye out for potential support for Bitcoin near $17,700 on the downside. And then again at the 300-week moving average, which is around $17,250. Bitcoin’s realized price above $21,650, the 60-day moving average of $22,000, and the cycle range high of $25,000 are Thorn’s short- and medium-term upside targets, respectively.
In addition to Bitcoin, EtherETHUSD +2.00%, the second-largest cryptocurrency, gained 10% to near $1,600 despite experiencing a more significant decline than its more prominent competitor. Alternate cryptocurrencies, also known as tokens, experienced similar levels of success, with Cardano gaining 7% and Solana gaining 5%. Dogecoin DOGEUSD +0.17% and Shiba Inu gained 6% and 4% respectively during this time period, demonstrating the resiliency of memecoins.
Is There Any Chance That Bitcoin Will Succeed?
The Bitcoin chart is showing some signs of recovery after its recent drop. However, there is still some uncertainty regarding whether or not it will be able to sustain the slow climb back up to $20,000 in price.
Bitcoin had previously fallen to $19,500 and then recovered to $19,000 before falling again to $19,847. Later on, Bitcoin had recovered to $20,000 but then fell again. Because of this, it is difficult to believe that the current upward momentum will be maintained given the fluctuations.
Nonetheless, other metrics to measure Bitcoin’s usefulness point to the currency’s potential. For instance, Bitcoin’s market share increased over the past day, indicating that it outperformed alternative cryptocurrencies even though its value is decreasing.
What Is Going on With the Alternative Coins?
The fact that the movement of Bitcoin has an effect on altcoins is a noteworthy aspect of the cryptocurrency market. When Bitcoin’s price moves in an upward direction, nearly every alternative cryptocurrency follows suit, and vice versa. After Bitcoin’s price dropped by a certain percentage, the value of other cryptocurrencies followed suit and fell by an equivalent amount.
The overall value of the market experienced a decrease as a direct result of the cumulative effect of those value losses. The chart for alternative cryptocurrencies has revealed some very slight price drops.
The chart that was provided by Quantify Crypto demonstrates that the value of these alternative cryptocurrencies is decreasing rather than increasing. For instance, ADA lost 3.7% of its value before recovering 4% of it, whereas Ethereum has now gained 3% of its value. The value of several alternative cryptocurrencies, such as BNB, has decreased by 1%, while the value of XRP and AVAX has also decreased on the chart. However, it appears that certain cryptocurrencies are doing fairly well, albeit not very well.
Forecasting the Price of Bitcoin
The price chart for BTC expressed in USD appears to be very bullish at first glance. On the other hand, what appears to be a bear flag breakdown occur during the recent breakdown from the rising wedge. Following the breakdown of the bear flag, a straightforward BTC technical analysis provides us with a measured target of $14,600. The only way to get out of this predicament is to retrieve the $25,000 within the next few weeks. This is the only option.
However, due to the fact that our forecast for the price of Bitcoin also takes into account the macroeconomic climate, reaching this bearish target won’t be as simple as it sounds. As soon as the FED reverses its decision to raise interest rates, there will be a significant uptick in demand for risky assets such as Bitcoin. Before engaging in any sort of bias in the current market conditions, therefore, sound risk management is essential.
