Now bitcoin is trading at $21.6 thousand, over the past week it has risen in price by 9.3%. Astol Advanced Limited specialists analyze the situation on the markets and explain the reasons for the growth and fluctuations of the crypto market over the past week, talk about its prospects for the current week and possible changes in the near future.
According to Andjei Korotkewič, CEO of the ASTL investment project, "Buyers still have an edge." The past week has been volatile in all markets. In the first half of the week, the dollar continued to strengthen, hitting new year-to-date highs against a basket of currencies. The dollar index tested the mark of 110.78 points. On Tuesday (September 6), the euro / dollar fell to a low of 0.9863 since the beginning of the year. Against the background of the strengthening of the dollar and the decline in stock indices, the BTC/USDt pair fell to $18.5 thousand.
After updating new highs, the dollar index sharply corrected to 108.36 points. It was the biggest dollar sell-off since July. Profit-taking on long positions was facilitated by the statements of the head of the US Federal Reserve, George Powell, who repeated that the Central Bank is fully focused on reducing inflation in the US, but did not add anything new to this regarding the increase in the potential for further tightening of monetary policy. He repeated statements made at a recent symposium at Jackson Hole.
Also on Thursday, the ECB raised the rate by 75 bp to 1.25% per annum. It was Powell and the ECB decision that pushed the dollar, the S&P500 index and cryptocurrencies to corrections. The next Fed meeting will take place on September 20-21 and it looks like Powell will no longer speak before it. Accordingly, one of the potential risks in the coming week for the dollar and stock indices is the publication of the US consumer price index for August. The report will be released on September 13th.
The market expects inflation to decline on a monthly and annual basis. A weak August CPI report could challenge market expectations for a third consecutive 75bp gain. at the end of this month. Rates futures include a 75bp increase. with a probability of 91% against 57% on September 2.
Now let's see how the technical picture has changed after the rebound. The S&P500 bounced off the daily trend line. The rebound of the S&P500 futures was on volume. For buyers, this is a bullish signal, but first you need to survive the inflation report for August. Raising rates by 75 bp is included in the price, so investors can continue to buy back cheaper shares until September 21.
Since the beginning of the week (September 5), the BTC/USDt pair has risen by 7.53% to $21.5 thousand. If we count from the weekly low of $18.5 thousand, then Bitcoin has risen in price by 15%. Buyers first successfully passed the resistance of $19.5 thousand, collecting all the stops above it. Then, within three hours, the price moved to the resistance of $20.5 thousand, which buyers could not pass in the week from August 29 to September 4. Since there was no rebound from the resistance, they pushed the price to $21.6 thousand.
As a result of Friday (September 9), the S & P500 index rose by 1.53%, Nasdaq - by 2.11%. Cryptocurrency buyers have an advantage to push even higher before next weekend as a double bottom reversal pattern has emerged on the daily timeframe after a sharp rebound. Whether it will work or not, we will find out after the close of trading on Tuesday. For buyers, a new resistance zone is $21.9-22.5 thousand. As long as the price is trading below $22.5 thousand (trending from the top of $69 thousand), the market remains under the control of sellers.
As for the increased volumes in the cryptocurrency market, I think they are caused by the ether rally before the global update. If bitcoin had no dependence on the American stock market, then its prices would definitely not be in the region of $20,000, but much higher.
The long-awaited Ethereum “merger” will also take place on September 15th. We all hope that there are no big surprises. Also on this day, the difficulty bomb of the new network will be launched and the mining of the ether itself will “die”, flowing into new forks and alternative solutions.
According to Konstantinas Sizovas, Chief Financial Officer and Head of Research at Astol Advanced Limited, "Expectations in the market are still moderately negative." In the last 10 weeks, a steady weakening of bitcoin relative to the rest of the crypto market has continued. For the first time in the last 4 years, its share in the total capitalization fell below 40%, which last time happened against the backdrop of the final stage of the bull market, but now the reason for the weakening could be the growing popularity of Ethereum, while the bearish trend is in full swing. In addition, the next stage of updating the Ethereum ecosystem is scheduled for the middle of the coming week - the main network is expected to merge with a test branch in order to switch to a new PoS consensus mechanism. This event may cause increased interest, and, as a result, an increase in demand for the token.
In this regard, expectations for bitcoin are moderately negative. We expect a resumption of falling to the lower border of the previously defined corridor of $19-21 thousand, but with a potential breakout in case of a sharp increase on the eve of a downward reversal of the local trend, then we can expect a series of new annual lows in the fall.
For Ethereum, expectations are neutral with a possible transition to an active stage of growth. Directly in the process of merging the two networks, high volatility can be observed with price jerks both in one direction and in the other, but with a successful completion, rapid growth on the wave of “euphoria” from success in the conceptually most important event in the cryptosphere over the past few years is quite possible.
