Oct 26, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
As growing expectations of dovish signals from the Federal Reserve weakened the dollar, Bitcoin reached a three-week high and Ethereum reached its highest level since the merger.
By 22:27 ET (02:27 GMT), Bitcoin was up 4.6% to $20,201, trading above $20,000 for the first time in three weeks. Ethereum was up 10.7% to $1,485—a one-month high—at the same time.
As the dollar fell, gains in both tokens indicated a broader crypto market uptrend. According to data from Coinmarketcap, the total market capitalization of all cryptocurrencies is just $30 billion short of $1 trillion.
Markets are pricing in the possibility that a significant slowdown in the US economy will cause the Fed to relax its hawkish stance. Even though most people still think that the central bank will raise rates by 75 basis points in November, traders are betting that the bank will slow down the rate hikes the next month.
House prices in the United States fell last month, according to data released on Tuesday. The reading came after PMI data showed that industrial activity in the United States was down for a long time in September.
The dollar fell for the last four sessions as a result of the possibility of a less hawkish Fed. On Wednesday, the dollar index and its futures were both unchanged at 111, more than two weeks lower.
Cryptocurrency markets were able to break out of their two-month trading range thanks to the weakening dollar. However, it remains to be seen whether the market can maintain its uptrend, just like previous breakouts.
Reports that a number of wealthy Asian investors were investing in cryptocurrency, particularly Bitcoin, also encouraged markets.
The largest cryptocurrency in the world had climbed as high as $22,700 last month before falling back to levels that were close to annual lows. As the Federal Reserve began tightening monetary policy this year, the token and the broader crypto market experienced significant losses.
In the midst of an ongoing dispute with the Securities and Exchange Commission, regulatory updates to the crypto industry are also the focus.
Technical Analytics
For the past few months, the price movement of bitcoin has offered incredibly minimal volatility and unpredictability. Within the daily timescale, the price has created a triangular pattern.
The 50-day moving average and the triangle’s top limit, which lines up around the $19.5K mark, are currently the price’s two main obstacles. To reclaim investors’ faith and print a bullish expansion move toward the $25K big resistance, the cryptocurrency needs to overcome these two key resistances.
On the other hand, if Bitcoin is rejected at this level, a move toward the $16K support area might be unavoidable.
Source: TradingView
The price has been stuck in a continuous range between the $25K level and $18K since mid-June. $20.5K became a big obstacle at this time and has consistently refused the price.
The difference in efficiency between the $20.9K and $22K ranges is evident, though. These inconsistencies are often used by the market to determine its next significant move. Therefore, exploiting this imbalance to fuel another negative move into the $18K level looks to be the most plausible scenario for Bitcoin in the coming days.
The $16K level will be a potential outcome for the coin if the support fails to hold.
Over the past few months, Bitcoin has been attempting to reverse from the $18K support area after numerous separate clusters of market players suffered significant losses. The cryptocurrency is currently stuck in the $18K–$24K price range, having failed to recover.
The fact that the short-term holder SOPR has not declined much in comparison to the bear markets of 2018 and 2015 shows that this cohort has not yet experienced major losses.
As a result, the capitulation event could yet be completed by a further decline toward lower price levels.
