Contrary to forecasts and fears, Bitcoin managed to keep the $18.5k–$19k key zone intact. Due to this, the price of the cryptocurrency reversed and recovered above $22k over the weekend. Impulsive and powerful upward movement became possible due to a number of fundamental factors, as well as the categorical skepticism of market participants. As a result, Bitcoin reached the level of $22k and continues to consolidate to resume the upward movement. However, the influence of certain factors can significantly affect the prospects of the main cryptocurrency in the short term.
At this stage, there are two fundamental problems for Bitcoin to resume its upward movement. One of them is the Ethereum update, which risks drastically changing the balance of power in the cryptocurrency market. Chainalysis analysts stated that, most likely, The merge update will give Ethereum an advantage over BTC and make it even more attractive to institutional investors. In addition to the upcoming interest in Ethereum, there has already been an increase in investment infusions into the altcoin. Indirectly, this is evidenced by the decrease in the level of Bitcoin dominance to the level of 39%. After an upward spurt over the weekend, the indicator reached the level of 41%, however, the second fundamental problem of BTC will not allow to build on this success.
The key deterrent to the potential growth of Bitcoin is the macroeconomic situation and the policies of the Central Banks. Last week, the ECB raised its key rate by 75 basis points, with an increase forecast of 0.5%. This decision indicates the absence of significant changes in the monetary policy of the Central Bank. A similar situation is observed in the US, where markets estimate a 70% chance of raising the key rate by 75 basis points. This week, the inflation report for August will also be released, which is able to give a positive impetus to the crypto market. An easing of monetary policy is also likely closer to November, when the elections to the US Congress begin. This gives hope for the recovery movement of Bitcoin within wide ranges.
However, there are alarming factors that indicate the likelihood of a protracted inflationary crisis. Goldman Sachs experts are confident that in 2023 the inflation rate in the United States will reach 22%. And there is no doubt that this will cause a corresponding reaction from the Fed and the maintenance of a tight monetary policy. Under such conditions, it is not necessary to hope for a serious rally in the price of Bitcoin. In the more foreseeable future, in addition to fundamental factors, serious pressure from miners remains. Miners have sold over 4,600 BTC over the past few days, according to CryptoQuant data. Mining companies will remain an important factor that puts pressure on the price both when it grows (to take profits) and when the price falls to lows.
Despite the fundamental difficulties, Bitcoin has a good chance of realizing some bullish runs. The main reason for optimism was the formation of the largest green candle since May 30th. The formation of such a pattern indicates the gradual activation of buyers and the growth of bullish sentiment. Given the presence of a news and buying corridor for growth, Bitcoin may try to reach a local high at $25k. The successful consolidation of the cryptocurrency above $22k can become a springboard for further upward movement, in case of a positive response from US investors.
As of writing, we see signs of the upside potential of Bitcoin drying up on the daily chart. The size of green candles gradually began to decrease, and the appearance of wicks indicates the activation of sellers. The price faced serious resistance near the $22.1k level. Technical indicators confirm the presence of a serious seller holding the $22.1k resistance zone. The RSI index continues to move upward, but the characteristic breakdown on the chart indicates the presence of serious bearish volumes. Stochastic has entered the oversold zone and is moving sideways. The probability of a reversal through the formation of a bearish crossover increases significantly.
At the same time, MACD resumed its upward movement and is approaching the zero mark and the green zone. This may indicate the formation of a fundamental upward movement of the cryptocurrency. We see a similar movement on the chart of the S&P 500 stock index. The correlation of Bitcoin with the stock market remains, which adds fuel to the asset for growth.
It is important to note that nothing has changed fundamentally. Bitcoin and the fund are rising while the US dollar index corrects. The break in the inverse correlation between BTC and DXY will be the main signal for a change in the fundamental situation. Given the temporary correction of the dollar index, we can count on the continuation of the upward movement of BTC/USD with a potential of up to $25k.