What a total opposite for cryptocurrency investors! – The road beyond the resistance of $ 46,000 seemed to be emerging for Bitcoin (BTC). Not only were the current risks on the financial markets well integrated into the prices, but nothing predicted a turnaround in the situation compared to last week. However, two catalysts have come to thwart the rebound of the king of cryptos since mid-March.
First, the future vice-president of the FED, Læl Brainard, surprised everyone. Known for her accommodating side, she admitted that more aggressive monetary tightening than expected would be necessary to fight inflation. And then this unexpected thunderclap was unfortunately confirmed in the last few minutes of FOMC.
This now follows a reduction in the asset balance sheet of about $95 billion per month in addition to rate hikes. From May, the FED will focus on economic stability at the expense of price support for risky asset classes. Obviously, cryptocurrencies have taken the hit, with BTC in the front line, which is dangerously close to a next support. Faced with this new monetary paradigm, are we witnessing a return of uncertainty around the prices of the king of cryptos?
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Bitcoin – Sudden return below $46,000
The big weekly bearish candle is not a pretty sight because Bitcoin prices fell back from $47,000 to $42,000. Nevertheless, I had expressed reservations upstream, because the previous one left me skeptical about the dynamics to come. It is clear that this week’s news has confirmed this caution.
For investors/traders, the so-called breaking of the resistance at $46,000 is the worst technical adverse signal that can happen to them. Especially since it is doubly a failure, if we coordinate it with certain Ichimoku curves in weekly units. On the one hand, the BTC returns in the middle of the Kumo (cloud) and very close to the Tenkan. On the other hand and simultaneously with the latest price movements, the Chikou Span is embedded again in the cloud.
All of these recent technical signals would be enough to put the shoulder-head-shoulder (ETE) back on the table once again in the event of a rapprochement at the $41,000 level. But also a return to the neutralization of the bull cycle since 2019, which would be relative given the excellent 2020 and 2021 vintages.
Bitcoin – Further consolidation towards $41,000?
Seen how it pines, Bitcoin is likely to threaten the $41,000 support, a major level of past ETE validation. It would be better if the red line was not crossed. Otherwise, we would jeopardize the rebound that began in mid-March. What again tarnish the hopes of a favorable trend reversal. And in this sense, the crossing of the downtrend line since its last ATH in November 2021, would no longer be of much help.
As the nightmare does not end there, the bearish candles of Tuesday and Wednesday caused a decline in BTC prices below the Tenkan and Kijun respectively. Then at the same time, that of the Chikou Span below the resistance of $46,000. Fortunately, the two who are pointed out, remain above the Kumo. This leaves us hope that the $41,000 could serve as a fulcrum for a new attempt to go beyond the $46,000.
In summary, many investors believed that the crossing of the resistance of $46,000 would quickly be history. But that was without taking into account the abrupt reversal of the Fed’s monetary policy, which, in my opinion, puts things in order given the inflationary pressures in the United States.
Add to that a strong dollar and a rise in bond rates that do not encourage risk taking. As a result, the high correlation with equity indices penalizes Bitcoin. The opportunity to remember that technical analysis is not a reliable tool for predicting price movements. Hence the importance of corroborating it with fundamental analysis.
From now on, we will have to be on the alert if Bitcoin has the bad inspiration to fall towards $41,000. In the event of a bounce off the ETE neck line, the $46,000 resistance would still be in the cards hoping for a better outcome than the previous one. Conversely, the price trend of the king of cryptos would revert to uncertainty mode.
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