Bitcoin Extends Gains & Breaches Familiar Resistance as the US Dollar Deflates

BTC/USD Analysis

The popular coin runs its fourth straight profitable day and trades above 20,000, in a good week for cryptocurrencies, as FXCM's CryptoMajor Basket gains more than 10% at the time of writing. They benefit from the US Dollar's slide, due to a drop in bond yields and the easing of expectations around the Fed's monetary tightening path.

BTC/USD has moved beyond the EMA200, pausing the broader downside bias and now breaks above the familiar resistance, provided by the 50% Fibonacci of September high/low drop, However, I am still cautious for a sustained advance that would challenge 22,798, especially with the US PCE Inflation and Q3 preliminary GDP looming on Thursday.

This week's relief rally has created overbought conditions, with the Relative Strength Index (RSI) at the highest level since September, which had then sparked a decline. Furthermore, BTC/USD has rejected the 50% Fibonacci multiple times over the past few weeks, As such, we can see renewed pressure and a covering of this week's gap (at around 19,200-19,190), although a catalyst will likely be required for new lows towards 17,566.

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Bitcoin has lost around 60% of its value during the first nine months of the year and although its managed to post marginal gains in Q3, it could not avoid fresh two-year lows. This collapse in popular crypto and other digital assets, has had detrimental effect to various companies.

Tesla Motors Inc recorded $170 million of impairment losses on its crypto investments during that span, from the $101 million it had lost in the same nine-month period a year ago, according to a recent SEC filing. [1]

Google-parent Alphabet Inc (GOOG.us) meanwhile, saw its advertising revenue harmed in the third quarter, due to reduced spending from crypto companies, among others. During yesterday's earning's call right after the Q3 earnings, Chief Business Officer noted a "pullback in spend by some advertisers in certain areas", which included the financial services subcategories such as "insurance, loan, mortgage and crypto". [2]

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 25 Oct 2022 https://www.sec.gov/Archives/edgar/data/1318605/000095017022019867/tsla-20220930.htm

2

Retrieved 31 Jan 2023 https://www.youtube.com/watch

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