Bitcoin has dropped to around $29,140 as markets turn risk-off, which suggests that cryptocurrencies are still sensitive to macroeconomic factors. Bitcoin passed $30,000 last week, hitting close to $31,000, but has struggled to maintain these gains amidst profit-taking and consolidation.
$30,000 (red horizontal) is proving to be a psychological level and is acting as a key resistance. Short-term factors pushing prices down were inflation concerns and the prospect of interest rate hikes, which also impacted US30 and SPX500. While the Fed's easier monetary policy expectations have fuelled Bitcoin's recent rally, the narrative remains vulnerable to yield changes.
St. Louis Federal Reserve President James Bullard's recent comments on higher interest rates and higher-than-expected inflation data from the UK have also contributed to investor nervousness.
The H4 chart shows a possible head and shoulders top, which is a bearish pattern. However, the pattern is yet to complete i.e., break below its neckline (green trendline).
Despite the short-term chart, the longer term chart shows a series of higher troughs followed by a higher peaks, which indicates an uptrend on a primary trend basis.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.