Bitcoin (BTC) starts a new week with much to make up for after its worst April performance ever.The monthly close placed BTC/USD firmly within its est
Bitcoin (BTC) starts a new week with much to make up for after its worst April performance ever.
The monthly close placed BTC/USD firmly within its established 2022 trading range, and fears are already that $30,000 or even lower is next.
That said, sentiment has improved as May begins, and while crypto broadly remains tied to macro factors, on-chain data is pleasing rather than panicking analysts.
With a decision on United States economic policy due Wednesday, however, the coming days may be a matter of knee-jerk reactions as markets attempt to align themselves with central bank policy.
Cointelegraph takes a look at the these and other factors set to shape Bitcoin price activity this week.
Fed back in the spotlight
Macro markets are — as is now the standard — on edge this week as another U.S. Federal Reserve meeting looms.
As inflation runs rampant worldwide, it is expected that Chair Jerome Powell will make good on his previous pledges and announce key interest rate hikes.
Wednesday will be pivotal.
The Fed is expected to confirm a $95B per month sell program which has not yet been unleashed on the market. https://t.co/gRRwd059Lw
— Charles Edwards (@caprioleio) May 2, 2022
How severe and how quickly they are applied is a matter for debate, and a separate debate concerns whether markets have already “priced in” various options.
Any shocks are likely to spark at least temporary volatility across markets, and over the past six months or so, crypto has been no exception.
Attention is thus on the Federal Open Markets Committee (FOMC) meeting to be held Tuesday and Wednesday.
“First came the Fed. Then the Netflixpocalypse. Then the Russian invasion. Then the sanctions. Then the Fed and the largest treasury dump ever. This week it was earnings. Next week the Fed again,” macro analyst Alex Krueger summarized over the weekend.
“The Fed’s QT announcement on Wed will determine the fate of the market.”
Krueger was referring to a policy known as “quantitative tightening” (“QT”) — the counterpart to quantitative easing, or QE, which describes the pace of economic support withdrawal by the Fed in a bid to reduce its $9 trillion balance sheet.
Risk assets, already sensitive to a conservative environment, are meanwhile already tipped by Bitcoiners to lose big in the coming months, taking crypto down with them.
“It’s easy to overlook this, given the broad retreat of the market last week, but: Along with meme stocks, the Bitcoin-sensitive equity basked is already making new lows,” Jurrien Timmer, director of global macro at asset management giant Fidelity Investments, added.
An accompanying chart of the Goldman Sachs Bitcoin-sensitive equity index — 19 major cap stocks with exposure to crypto — spelled out the relative pain already being experienced.
Next week will see the focus shift back towards inflation itself with the publication of U.S. consumer price index (CPI) data for April.
Time for $28,000 Bitcoin?
At around $37,600, April’s monthly close was decidedly uninspiring for Bitcoin hodlers, data from Cointelegraph Markets Pro and TradingView shows.
Despite subsequently regaining some ground, BTC/USD has reaffirmed at least a short-term desire to trade in a narrow range well below the top of its 2022 trading corridor of $46,000.
Expectations were previously high that April would deliver better performance, but in the end, 2022 ended up being Bitcoin’s worst April on record with overall losses of 17.3%, data from on-chain monitoring resource Coinglass confirms.
On the back of that, it is thus little wonder that the mood among analysts is equally cautious.
“The BTC chart is heavy right now, & a break below $35k could cause a rush for the exit… But I don’t trust breakdown patterns in this range. We’ve seen short squeezes and ATH breakout traps over the past year,” popular trader Chris Dunn tweeted Sunday.
“Risky to anticipate, better to react… I’d love a $26k washout.”
Dunn is far from alone in calling for a capitulation event to take the market to $30,000 or under.
“In regards to talk of capitulation, I believe that it would require Bitcoin to go below $30k,” analyst Matthew Hyland argued in one of several tweets about Bitcoin’s volume profile.
“Low volume since May of last year which brought BTC to $30k. Low volume = low turnover of buyers and sellers. Below 30k would unlock the buyers who bought pre-65k in early 2021.”
Hyland explained that low-volume markets are apt to see larger price swings, and a significant BTC price dip may be necessary to reignite engagement amid an overall lack of participation at current levels.
To unlock higher volume, it would require Bitcoin to flush below 30k
Based on the volume levels between 20k-30k (which BTC spent less than 3 weeks in), I wouldn’t expect it…
cointelegraph.com