After US inflation fell below 8% in October, all risk asset classes had an exceptional session. So much so that many investors are beginning to believe in the Fed pivotThis means a shift from a restrictive to an accommodative monetary policy.
From this pleasant macroeconomic surprise, Bitcoin has managed to recover some of the losses from its recent lows of the year following the dispute between Binance and FTX. However, prices are under pressure on fears thata third wave of correction of its bear market could materialize towards $12,000.
In an uncertain market environment that has been all over the place this week, let’s closely evaluate possible scenarios for BTC according to the latest technical analysis.
Bitcoin in weekly units – downtrend line breakout about to expire?
A fortnight ago, Bitcoin prices had managed to cross the descending line. But reading between the lines, we have pointed out in previous market updates that this positive signal lacked conviction. As of now, This week’s bearish candle could validate the possibility of a deceptive bounce. The proof is that BTC has made new lows for the year below $16,000.
Although we have been struck by the supposedly good inflation release in the US, prices are struggling to touch $20,000 or 2017 ATH again. In any case, the threat of a Weinstein Stage 4 end would certainly be postponed. And on that note, the 30-week moving average continues to glow to the downside. On the other hand, technical indicators are aborting their advance towards their respective waterlines.
Assuming a final break of $20,000, sellers would look to drive the nail towards $12,000.a critical level that favored the last bull run. On the other hand, a pullback to the $20,000 level, which was confirmed prior to this complicated week, would potentially lead to a return of BTC prices towards the $26,000 resistance level.
That said, The latter scenario, favored by cryptocurrency investors, could be in jeopardy. Especially if the current situation does not improve rapidly.
Bitcoin in daily units – Negative signals converge at full speed.
The magnitude of the decline began on Tuesday in Asian hours. And just before yesterday’s off session, two large bearish candlesticks broke hard through the $20,000 support. Currently, prices are trading below the previous low of the year from last June.
Although not yet definitive in weekly units, breaking the 2017 ATH in daily units would open a first door to a third wave of BTC bear market correction since its last ATH in November 2021. In support of this negative signal, the MACD and RSI have fallen sharply below the zero line and neutral zone at 50 respectively.
And as we have mentioned many times on the condition that the downside prevails, BTC prices landed at $16,000 in reaction to an oversold RSI. Assuming this support holds, the best we can hope for at this point would be a pullback or bounce below $20,000 resistance.
Conversely, a second open door would seriously confirm the scenario of a third wave of correction. With the idea that prices do not fall back towards $12,000, but to even lower levels that could end the latest bull run.
BTC – Bitcoin is losing ground to gold.
A third wave of correction appears to be brewing in the Bitcoin bear market. We will have to wait for the next few days/weeks to know the verdict. However, we would have expected BTC to take full advantage of the recent declines in the dollar index and bond yields. And we have to admit that this is not really the case, despite the extenuating circumstances.
Quite the opposite of gold (XAU), which is recovering from its lows of the year. And not only that, benefits from the fall in real rates. thanks to the favorable conjunction between bond rates and inflation. But the yellow metal is regaining some strength since Bitcoin’s last ATH in November 2021. Because the XAU/BTC ratio is gradually rising to critical levels. So much so that Weinstein Phase 2 is taking hold.
Over the past few weeks, we have been under the impression that gold is trying to assert its safe haven status. And with the economic recession looming in both Europe and the U.S., it could outperform bitcoin as long as it takes to break out of its correlation with equity indices.
However unthinkable to the financial community, the loss of credibility of central banks (and more specifically the FED) would constitute a positive driver for the two most popular asset classes for retail investors. In which case, we could eventually see a synchronization in the rise of gold and Bitcoin. The former because it is nobody’s debt. And the latter because it is based on a decentralized system.
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