Earlier this week, Bitcoin tried to break above $25,000 but failed. It declined to the low $24,000, yet still signaled a potential shift in price momentum. This is the first time for the world’s biggest cryptocurrency by market volume to break such heights. Falling under $24K is where the bearish momentum is according to experts. Luckily, it has been able to hold its ground in an otherwise flat top-10 crypto coin market.
On the other hand, some altcoins have been making huge gains. The altcoin market is led by DOGE, which surprisingly climbed to $0.09 for the first time since May. What does this all mean? Is Bitcoin’s consolidation a starting point for a new bull cycle, or is it a bear market rally in an overbought extreme?
Bitcoin and Ethereum Take a Breather
BTC and ETH were pushing for higher ground in the past few weeks. However, they’ve faced heavy resistance at a stiff multi-month descending trendline. Other equities have been bullish the same in the face of a stiff inflation and the interest rate hikes. Some traders fear that the 32-day uptrend on the DOW may spell a bear market soon, but that remains to be seen.
At the moment, Bitcoin has consolidated around the $24,000 mark and so has Ethereum around $1,900. In recent weeks, there have been rumors on Twitter that BTC, ETH, and altcoins selloffs are occurring just prior to FOMC meetings, then rallying afterward. That only supposedly happens if the set rate aligns with the investors’ projected figure. This dynamic also aligns with the belief that the Fed will suddenly abandon the monetary policy it has adopted recently after inflation peaks. This should be a great trade for day traders, but there’s a glaring problem with it. Inflation is currently peaking at 8.5% (if not higher), while the Fed’s projections are at 2%. That’s a long way to go.
In reality, Bitcoin’s price keeps a steady pace with S&P500. That’s why many experts believe investors should avoid trading with bias and keep an eye on the performance of equities markets.
A Strong Move at a Multi-Month Descending Trend
Over the weekend, Bitcoin made a move toward $25,000. It broke through $24,000 with ease, confirming the path many traders have foreseen. If you remember, last week we mentioned that it may be on its way to $28,000-$29,000, and while that ultimately didn’t happen, it really looked poised for those heights.
Given its inability to break out, there are now two options on the table according to most experts.
- Goes up to the $24K-$25K range, then reverses to new lows
- Falls to new lows from here. Bearish trend takes it below $23K, with possible consolidation above $26K
Of course, the market is pretty volatile and there’s no way to predict it accurately, but we feel that the next weeks will leave Bitcoin in limbo. The current $24,000 price level is a good starting point, so if Bitcoin makes a new rally, it’s best to start it from here.