Bitcoin Sale Continues As BTC Approaches $ 31,000 Ahead of Powells Speech

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The price of Bitcoin (BTC) continued its downward trend on Wednesday ahead of the testimony of United States Federal Reserve Chairman Jerome Powell.

The BTC / USD spot exchange rate fell to its lowest level in 17 days at $ 31,600 after falling 3.46% during the day. Meanwhile, CME futures linked to the pair plunged 3.41% to $ 31,515, extending their losses for the week to 9.5%.

The bulls step in at $ 31.5,000 to buy the Bitcoin plunge. Source: TradingView

Bitcoin had hit $ 35,000 in early July, as the bulls continued to defend support levels of around $ 30,000 against every attempt to lower.

Independent market analyst Will Clemente III noted that entities with poor selling history continued to absorb Bitcoin at lower levels from speculative traders, adding that the strategy was effectively removing a good BTC supply from the market. .

In the absence of a surrender event, IMHO, it’s a question of when the re-accumulation process will be complete rather than if, Clemente wrote.

Once the process is complete, the market would experience a supply shock. But…

Bitcoin sold for $ 35,000 and fell to nearly $ 31,500 in Wednesday’s session. One factor that has made traders cautious is the uncertainty over how the Federal Reserve would react to rising inflation which is accelerating at its fastest pace in 13 years.

In detail, the US consumer price index (CPI) rose 0.9% in June 2021 compared to the previous month and 5.4% compared to June 2020. The higher readings of the inflation focused on Powell’s appearance before the House Financial Services Committee Tuesday at 9:30 a.m. EST.

Core inflation data in the United States is at its highest level since 1991. Source: Bureau of Labor Statistics

The central bank chief hopes to clarify his position on the current surge in consumer inflation. In his previous statements, Powell has suggested that the Fed should act with caution unless it sees maximum recovery in US labor markets.

Therefore, with the backing of some like-minded Fed officials, including New York branch chief John Williams, Powell could ignore the cut to the $ 120 billion monthly asset purchase program. the Fed following strong US growth and high inflation.

Fed’s hawkish tone coincides with falling BTC prices

Meanwhile, Evercore ISI economist Peter Williams predicted that rising CPI readings would increase tensions among members of federal open market committees.

He noted that some hawkish members might demand that tapering begin as early as September, while adding that the Fed, in general, would take a wait-and-see approach, believing inflation to be transient in nature.

When it comes to Bitcoin, the outlook remains mixed, especially after the cryptocurrency has failed to respond to inflation alarms in recent months, China’s crackdown on the crypto industry, increased regulatory oversight, the Fed’s rate hike plans for 2023 and Elon Musks’ anti-crypto tweets.

Fortune reported that Bitcoin was running on its own beater, ignoring recent spikes in major inflation indicators. This makes the cryptocurrency a questionable hedge against rising consumer prices.

However, Joel Kruger, forex strategist at London-based investment firm LMAX, thinks differently. The analyst noted that the long-term outlook for Bitcoins remains skewed upward as there is a legitimate fear of rising inflation.

More setbacks on SOME investors who view Bitcoin as an emerging risk-correlated asset, he tweeted on Tuesday.

In the short term, there could be more downside if stocks dip. But ultimately, Bitcoin should be well supported on the longer term value proposition.

Additionally, Greg Waisman, co-founder and COO of cryptocurrency infrastructure firm Mercuryo, offered a more critical perspective.

First, he noted that macro investors do not believe in the true value of Bitcoins, even in the face of rising inflation. And second, it projected Ether (ETH) as a better cryptocurrency, given its recent rise against Bitcoin.

Ether prices relative to Bitcoin have jumped 136% since the start of the year. Source: TradingView

Bitcoin is the most expensive and renowned cryptocurrency, but it is not a cryptocurrency of the present day, Waisman explained, adding:

Ethereum is the real king of cryptocurrencies. Investors will continue to ride Bitcoin high and dump at their convenience. That said, Bitcoin will once again break through the $ 50,000 mark. Technical perspectives

Currently, lackluster volumes and a two-month-old downward movement continue to keep Bitcoin in a bearish state.

Bitcoin is holding above second quarter support at around $ 30,000. Source: TradingView

As of May 20, the BTC / USD exchange rate has trended downward inside a declining parallel channel, bouncing off its support trendline and retreating during the stress test. At the same time, the $ 30,000 to $ 32,000 area provided a confluence of additional support.

The pair appears to be moving back towards the lower trendline after the last channel re-test of the upper trendline. However, the short target in the current scenario is below $ 30,000 (down the second quarter of $ 28,732).

Conversely, a break north of the channel resistance trendline could cause BTC / USD’s 50-day simple moving average (50-day SMA; the blue wave) to test at $ 35,363 as the next bullish target. The region has seen massive sales in recent sessions.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.

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