Bitcoin reached a local high of $22.3k and fully realized the advantage formed after volatile weeks of capitulation. However, subsequently, the coin made a false breakdown of the $22k level and began to decline. The main reason for the unsuccessful upward movement was low purchasing volumes. This disadvantage, in turn, is provoked by the difficult market situation and fundamental factors. To resume the upward movement, the cryptocurrency must continue to remain in consolidation and accumulate volumes.
In the current situation, such a scenario is excluded due to the negative fundamental background. Fundamentally, Bitcoin is not ready for growth, as there are a huge number of constraining factors. The decline in the Bitcoin price over the last two days is due to negative expectations from the publication of the dynamics of the consumer price index. The expected forecast in the region of 8.8% will cause a corresponding reaction from the US Federal Reserve System. As a result, we will get an even more aggressive monetary policy and the next stage of the liquidity crisis. Bitcoin continues to maintain an increased correlation with stock indices. Therefore, you need to prepare for a price reduction.
Glassnode experts note that technically, the cryptocurrency has entered the capitulation zone, which is typical for the final stage of the bear market. However, as we expected, Bitcoin has enough potential to fall 5%–10% from the local bottom at $17.7k. Glassnode analysis showed that speculative investors remain in the market, and the recent consolidation period has only increased their number. Therefore, it is likely that we are waiting for another wave of sales.
Technically and fundamentally, Bitcoin is ready to sink to the next bottom. However, over the past two weeks, enough positive factors have appeared that can contribute to the greater stability of the cryptocurrency. The mining industry has stabilized after a record sell-off in June. Large companies have increased their income by stabilizing the Bitcoin exchange rate. Santiment also recorded a surge of optimism in relation to the first cryptocurrency in social networks, which indicates the favorable impact of the stabilization of the rate during the flat movement.
It is important to note that over the past week, there has been a significant decrease in the influx of investment in Bitcoin-based short products. Investments in such funds amounted to only $8 million, 80% less than in the last week of June. The second half of this week will have a key impact on the movement of Bitcoin in July. Reporting on inflation in the US and European countries, as well as the speech of the Fed members, should give investors a picture of what is happening in the next two weeks. The market is mostly negative due to the statements of the White House about the further growth of inflation and the Fed's policy.
In technical terms, the $18k–$19k zone will become the main battlefield after the announcement of the CPI. There is a large density of buy orders in this area, but the price has not yet fallen to this level. The current situation looks uncertain, but with a touch of anxiety. We see a price decline with increasing potential without significant resistance. At the same time, trading volumes remain low, indicating a lack of purchasing activity. From the perspective of several days, this indicates a breakdown of the $19k level.
As of this writing, Bitcoin holds the main psychological level at $19.7k. However, the bears are gradually pushing through the line of defense due to the falling activity of buyers. Over the past two days, we have not seen an impulse buyback, which allowed the downward momentum to accumulate strength.
Today will likely end with a breakdown of $19k and the start of trading the final part of the $18.5k–$19k support area. Subsequently, the price will continue to decline below the $18.5k level. Much will depend on the reaction of buyers. According to various polls, key players are ready to go down to $10k, which may contribute to the final decline in the $15k–$17k range.