The market expects that the inflation situation will still force the Fed to accelerate its tightening, the yields of the U.S. dollar and U.S. bonds rose strongly, and risk assets such as U.S. stocks continued to fall. Bitcoin is facing huge selling pressure under the suppression of the technical graphics of the falling flag, and it is likely to fall below the 30,000 mark.
Market trends show that investors do not believe in the dovish attitude shown by the Federal Reserve in its interest rate decision last week, while international tensions and uncertainty about economic recovery have turned investor sentiment toward caution.
Last week, the Federal Reserve held its May interest rate decision, which was in line with market expectations. The Federal Reserve announced a 50 basis point interest rate hike and will start to shrink its balance sheet in June. Regarding future monetary policy, Chairman Powell’s attitude is not as hawkish as the market expected. He said that the inflation situation A turnaround is imminent, with a couple of 50bps hikes to come, but 75bps is off the table. . . The dollar fell on hearing the news, and U.S. stocks rebounded.
Just one day later, the market trend turned again, the dollar resumed rising, and the European and American stock markets and Bitcoin fell again. The reason is that investors do not agree with the optimism shown by the Fed. The market believes that the inflation situation is still severe, and the Fed still has the possibility of raising interest rates by 75 basis points. So the market pushed the Fed again.
Although Bitcoin has a bright concept, it is still unable to benchmark against major assets such as gold at this stage. The key reason is supervision. At the same time, sanctions against Russia also involve cryptocurrencies such as Bitcoin, which are still regarded as risk assets for the time being.
The Fed’s interest rate hike and expectations of accelerated tightening have greatly affected the market liquidity of risky assets, while the rise in demand for the US dollar also restrained the trend of risky assets.
Bitcoin’s chart trend also shows considerable weakness, especially the blue descending flag trend is the most critical.
It can be seen from the daily chart that Bitcoin has fallen all the way from the high of 68568, and then entered a consolidation trend, forming a “falling flag” pattern, which suggests that the market outlook will continue to decline. The key support of Bitcoin this time is 40,000, and as the trend below 40,000 accelerates downward, this is also the time when the dollar continues to rise. According to the vertical distance of the falling flag, the target after falling below 40,000 is around 30,000, which is the low of the previous round.
After falling to the 30,000 mark, the influence of the falling flag has come to an end. However, considering the current US dollar performance and market fundamentals data news expectations, the decline may not be able to stop there. In particular, Bitcoin is extremely sensitive to risk sentiment. If the U.S. dollar continues to maintain its strength and U.S. stocks continue to decline aggressively, 30,000 may be difficult to stop the selling pressure, and the reference support below is limited. It is advisable to focus on the performance of the 30,000 line.
If Bitcoin stops falling and rebounds here, it is advisable to pay attention to the shock of 30000-40000, and confirm that it can stand at 40000 to further rebound; if it falls below 30000, it will continue to test 25000 and 20000. In the long run, this may be a more cost-effective allocation area. However, due to the tightening of the global central bank and the slowdown in the pace of world economic recovery, whether Bitcoin can truly bottom out still needs the resonance of many elements.
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