Bitrue Weekly Market Report: Bitcoin Forming a Possible Bottom - Are We There Yet?
Report Period: June 20th to 27th 2022
- The FED has the option to increase supply or to crush demand, and certainly the first option is not in Jerome H. Powell’s consideration to curb inflation
- Charles Hoskinson testifies at Congressional Hearing, alongside 6 other Crypto CEOs, on possibility of crypto regulation under CFTC, ADA seeing a spike in price the next day
- Crypto Bear Market: any “Not Bad News” can be “Good News”, volume is considerably low that a catalyst is needed for a potential price reversal
The FED has two coequal goals for monetary policy, which are maximum employment and stable price, meaning low and stable inflation. This “dual mandate” implies a third goal of moderate-long term interest rate. Currently the inflation rate is at record high of 8.1% in May 2022 and the interest rate is at a record low of 0.25% as COVID hit in March 2020. To curb inflation, The Federal Reserve Chairman, Jerome H. Powell, has two options — either increase supply to push the price down, or lower demand to stabilize prices. The first option is definitely not in the hands of the Central Bank.
On Wednesday Charles Hoskinson, CEOs of Cardano, and other 6 Crypto CEOs testified in front of the house as US Policymakers are considering a Crypto Regulation under the US Commodity Futures Trading Commission (CFTC). As Charles’ simple-plain-easy to understand explanation stole the show at congress, the price of ADA saw a spike up the next day trading session. It was up by as much as 16% until the weekend, before it consolidated at $0.5 on Monday, June 27th.
The crypto market has not seen considerable trading volumes in the recent weeks following a lot of the big names in crypto that crashed, such as Terra-Luna, Celcius, and 3 Arrow Capital. This has been concerning for a lot of investors as they have been waiting to flee into the market rather than seeing their money eaten by inflation. Any “Not Bad” news right now can be a good catalyst to at least bring the crypto market back on track for the rest of the year.
Bitcoin Bottoming: Are We There Yet?
Bitcoin has bounced from its year low of $17,800, and since then it has maintained its position above the $20,000 mark. This can be regarded as psychological support. Looking at the chart, there is a possibility that BTC has formed a bottomed formation with a prominent inverse head and shoulder pattern in the H4 chart. Currently, the price of Bitcoin has broken out above the trend and demand resistance line and became a support level. This could be a fake breakout that has tricked the weak hands to get back into the market irrationally. With relatively low trading volume during the breakout, the market has not shown a strong confidence that BTC will maintain its current price level. Therefore, we might go further down if the low volumes persist.
Ethereum has also been traded in relatively low volumes compared with the last 4 weeks. As the price fluctuations almost correlate with Bitcoin, there is a possibility that the short term run is not going to last long. The $1,000 price mark has been a strong psychological support level, although there is a bearish divergence forming between the price movement and its momentum. There is a chance that we can see another bottom, and fingers crossed, let’s hope for a higher low instead of a lower low.