Crypto

BTC: 3 Reasons That Prove Bitcoin Price Hasn’t (Still) Hit Its Lowest Level – Mirror Mag

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Bitcoin (BTC) rose slightly on August 20 but remains on track for its worst weekly performance in the past two months.

Bitcoin hash tapes flashing lower signal.

On the daily chart, the price of BTC is up 2.58% to $21,372 per token but is still down almost 14.5% since the start of the week, the worst weekly performance since the start of the week in mid-August. See article: Close-up of an Undervalued Cryptocurrency: What is NEAR Protocol Cryptocurrency and Should You Buy It Right Now? However, some on-chain indicators indicate that the Bitcoin correction phase is coming to an end.

This includes hash tapes, a metric that tracks bitcoin hash rates to determine if miners are in accumulation or capitulation mode. As of August 20, the metric shows that the miner capitulation has ended for the first time since August 2021, which could lead to a shift in price momentum from negative to positive.

However, Bitcoin has not been able to shake off a number of negative indicators, ranging from negative technical setups to continued exposure to macro risks. Therefore, despite the bullish indications of the channel, a bearish continuation cannot be ruled out.

Here are three reasons why the Bitcoin market may not have bottomed out yet.

Rising wedge of BTC price breaks

The fall in the price of bitcoin this week triggered a breakout of the rising wedge, which portends further losses for the cryptocurrency in the coming weeks.

Rising wedges are bearish reversal patterns that form after price rises inside a narrowing up channel, but resolves after price breaks out of a down channel, which can lead to a fall to the maximum height of the slope. Also Read: Crypto: These 5 Big Moments You Probably Missed This Weekend! That’s what happened.

Applying technical principles in the above BTC chart presents $17,600 as the target for a rising wedge breakout. In other words, by September, the price of bitcoin could fall by about 25%.

Bitcoin bulls misunderstand the Fed

Bitcoin jumped about 45% during the formation of a rising wedge after bottoming locally around $17,500 in June. Related: Investing in the Metaverse: 3 of the best cryptocurrencies and a simple step-by-step guide to investing money in the Metaverse today.

Interestingly, Bitcoin’s bull run coincided with rising investor expectations that inflation had peaked and that the Federal Reserve would start cutting interest rates as early as March 2023.

Expectations emerged after Fed Chairman Jerome Powell’s statement at the July 27 FOMC meeting.

However, the most recent Fed scatter chart shows that most officials expect rates to hit 3.75% at the end of 2023 and then fall to 3.4% in 2024. Rates remain speculative.

Louis Fed President James Bullard also said he would support a third consecutive 75 basis point hike at the central bank’s policy meeting in September. This announcement is part of the Fed’s commitment to bring inflation down to 2% from the current 8.5%.

See also: Options data shows Bitcoin’s short-term uptrend is at risk if BTC drops below $23,000.

In other words, bitcoin and other risky assets that fell into bear market territory when the Fed began an aggressive tightening cycle in March are likely to remain under pressure for the next few years.

If history is an indicator…

Bitcoin’s current price rally risks turning into a false bullish signal given the asset’s similar bounces in previous bear markets.

The price of BTC recovered almost 100% – from around $6,000 to over $11,500 – during the 2018 bear cycle, but then completely wiped out gains and dropped to $3,200. Notably, similar bounces and corrections also took place in 2019 and 2022.

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Be vigilant and consult your financial advisor before making any investment decision. Mirror-Mag cannot be held responsible for unsuccessful investments. Before using any third party service, you should do your own research.

Passionate about cryptocurrencies and DeFI, Thomas brings international news on the subject!

Thomas E.
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