The fundamental pressure on the crypto market has returned close to its maximum level with the Silvergate affair specific to the ecosystem, which is combined with macroeconomic fundamentals which are also at their peak in terms of constraint. As for the technical situation, the price of bitcoin is now close to the medium-term tipping point.
Fundamental pressure peaks on Bitcoin
The weeks pass and look alike for the crypto market since the middle of February, with a gradual fading of the bullish recovery in place since the beginning of the year as the fundamentals of downside pressure come together.
The market is doing its best to take the daily blows, whether they come directly from the ecosystem with the Silvergate affair or whether they have their source in the general economic framework and traditional market finance.
It all started three weeks ago with the update of inflation data in the United States and Europe. This is rebounding for the month of January and has stretched monetary policy expectations to the extreme. If we take the case of the first of them, the Federal Reserve of the United States (FED), the market is now projecting a Terminal rate of 5.75% with a temporary postponement of the pivot (starting point of a downtrend in interest rates) at the start of 2024.
Naturally, all these expectations are reviewed regularly and the next publication of inflation in the United States (next Tuesday) could bring some relief if the inflation rate surprised us by resuming its decline.
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Finally, market bond rates continue to climb. More particularly the cost of short-term money, which made new multi-year records and returned to its highest level of 2007, ie before the subprime crisis.
The macroeconomic lights are therefore bright red, as illustrated by the end reached this week by the inversion of the yield curve in the United States, a very relevant barometer of the probability of a recession this year.
Short-term interest rates are indeed well above the long end of the yield curve, let’s face it, without a quick pullback in inflation coming in the coming weeks, the global-macro framework will not allow BTC to break above any technical resistance.
Chart showing the following information: bond interest rates in the United States, the terminal rate anticipated for the Federal Reserve of the United States (FED) and the inversion of the US yield curve.
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Bitcoin on the boundary between bull and bear market
Let’s go back to the technical considerations for BTC which is experiencing a slow slide after failing to touch extreme technical resistance at $25,200 (remember my famous chartist “lead screed”).
The price of bitcoin is now close to the medium-term chartist tipping zone, that is to say the one that will order the trend for the next 4 to 8 weeks. This graphic boundary between the world of bullish recovery and the return of the bear market is once again defined by the $19,800 / $21,200 price zone, with the “eternal ex-ATH” still not far to go. talk about him again.
The market will make its choice between the time you read this and the end of next week.
Chart that shows weekly Japanese bitcoin price candles with an arithmetic price scale
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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.
Vincent Gane
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