Slack on the king of cryptos! “It had to happen one day. Indeed, because of the rise of the dollar and that of bond rates this week, the price of Bitcoin (BTC) sees its beautiful reassembled stopped dead. Especially since this occurs below a major level that the bulls are watching carefully. However, stopping this strong bullish move could be part of a process of neutralizing its bear run since its last ATH in November 2021.
Moreover, the latest technical analyzes show a certain resilience in prices on the downside. Unsurprisingly considering the latest moves we witnessed in the last quarter of last year. Although the king of cryptos is marking time, the bulls remain in control. Indeed, the gains at the start of 2023 remain substantial.
In a market context where a short-term resurgence of risk factors is manifesting, let’s review the possible scenarios for the price of Bitcoin in the days/weeks to come.
Bitcoin in Weekly Units – A Second Week of Consolidation
Unless there is a last-minute turnaround, Bitcoin is about to conclude a second consecutive week of decline. To the point that we would eventually head for a simultaneous price slide towards $20,000, Tenkan and Kijun. This has the consequence of returning to FTX’s pre-bankruptcy levels. But the crossing of the downward line of the bear run is not in question. And on the other hand, this consolidation might be welcome after the best January in the history of Satoshi Nakomoto’s digital currency.
On the other hand, it temporarily postpones the reintegration of the BTC price inside the Kumo (Ichimoku Cloud). To the point that bears won’t give up so easily. And for proof, the status quo of prices and the Chikou Span under the Kumo will continue for a few more weeks.
In the event of further consolidation, the challenge would be to preserve the $20,000 at all costs in order to finally achieve a low point higher than the previous one, after the $16,000 support. If successful, we could initiate a new upside leg to cross $26,000. This would coincide with signals favoring a neutralization of the bear run, or even the beginning of capitulation on the part of the bears.
Conversely, if the $20,000 was seriously threatened, the bulls would return to the uncertainties of the end of last year. With the prospect that the prices land abruptly in the direction of $16,000. And so, the scenario of a third wave of corrections, put away for a while, would come back to the fore.
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Bitcoin in daily units – Price soon below $22,000?
In daily units, we talked about the need for the price of Bitcoin and the Chikou Span to stay above the Kumo. For now, the bulls shouldn’t worry about that. However, the two consecutive weeks of decline led to a break in prices successively under the Tenkan and the Kijun. And as the bad news keeps coming, the $22,000 support might not last long.
The situation of the king of cryptos has deteriorated somewhat over this unit of time. And it would not be surprising if the downward movement that began on February 2 took a short break around $22,000. Especially since market psychology is likely to be in full swing near FTX’s pre-bankruptcy levels.
A throwback on the $22,000 would lead the bulls down the right path. Initially, the price of BTC would go back beyond the Tenkan and the Kijun. Then in a second time, he would go back to attacking $26,000. In which case, we would preserve prices and a Chikou Span above the Ichimoku cloud.
Conversely, the breakout of $22,000 would push for a larger than expected consolidation towards $20,000 or the 2017 ATH. At the same time, the Chikou Span would sink under the courses and would unfortunately renew contact with the Tenkan and the Kijun. And assuming the market backdrop is no longer rosy, the threat below $20,000 could sap much of January’s rebound.
In summary, the Bitcoin slack that we have been seeing since early February, currently reflects a legitimate lull after an extremely profitable January for bulls. But to lay the foundations for a neutralization of the bear run, it will be imperative to go through a consolidation (or downward leg) which would confirm a change in favorable polarity, a passage from resistance to support around $20,000. Not to mention that a reintegration of the BTC price remains the ultimate condition in order to reduce the selling pressure.
On the other hand, we will monitor the evolution of the dollar and bond rates in the immediate or near future. A continuation of their respective increases could indicate a return to mode risk-off. Which would mean that the FED would not intend to put an end to its monetary tightening. As a result, inflation in the United States remains three times above the 2% target. Consequently, Bitcoin, which is very sensitive to the monetary policy of the American central bank, could see its consolidation increase. With the fear that its bear run will accelerate downwards again.
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