Will the king of cryptos falter below $20,000? – As since 2017, the Bitcoin (BTC) ended September in the red. But compared to the main equity indices, it limits the damage with a drop of around 3.3%. Only gold is doing slightly better from month to month. And if you have been following this week’s financial news, it is likely that the urgent intervention of the BOE (Central Bank of England) is not unrelated to the relative outperformance of the two asset classes which are unfairly raising Controversy.
Indeed, to avoid the bankruptcy of Perfidious Albion pension funds in the face of margin calls linked to soaring rates, it had to rescue them by buying sovereign bonds. Following this unexpected announcement by the BOE, which jeopardizes its plan to reduce its asset balance sheet, we may be witnessing the beginnings of a loss of credibility for a Western central bank.
That being said, Bitcoin remains on the brink of a nervous breakdown. Because we are still on the verge of a resumption of its bear run since its last ATH in November 2021. And the latest technical analyzes would invite us to be extremely cautious.
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Bitcoin in weekly units – Still a nervous week
As we discussed in the previous market update, Bitcoin remains on a tightrope. But the $20,000 support has the merit of not breaking despite recent attacks from sellers. It is to wonder if the buyers would find a little hope. Or the sellers would show some signs of weakness.
For now, the current bear run imposes whether we like it or not. Firstly, BTC price and the Chikou Span unfortunately enjoy a status quo under the Kumo (Ichimoku cloud) week after week. And on the other hand, the fears last week seem to be coming to fruition. Indeed, the Kijun would start to fall pending confirmation at the end of the week. And the last time we had this technical signal, this had resulted in a heavy fall of the king of cryptos by more than 63% since its last failure below the resistance of $46,000.
In the event of a bis repetita, the breakout of $20,000 would lead us to a third wave of correction for which the objective would remain to be defined. To the point that the next supports would not hold water if new major risks were to be added to those which are already partly integrated into the courses.
Bitcoin in daily units – The yoyo around $20,000 continues
In daily units, we see Bitcoin stabilizing around the $20,000 support since mid-September. However, prices and the Chikou Span are below the Kumo after unsuccessful bounce attempts. At the same time, the king of cryptos is seeking to break free from Tenkan and Kijun.
For the most volatile Ichimoku curve, it’s ongoing. For the second, nothing would be gained in advance with regard to its horizontal evolution, which itself could act as resistance against potential passages above the cloud and the descending line. Failure would be expensive. Because precisely, the prices of BTC could rally to the support of $16,000, then that of $12,000. On the sine qua non condition that the possible wave of correction is coordinated. Except that the financial markets tend to have random mood swings.
In case the good surprise comes, Bitcoin above the $22,000 resistance would remove the threat of new year lows. But for all that, crossing the descending line and the Kumo would not allow us to project ourselves from the perspective of a favorable trend reversal.
In summary, Bitcoin plays on the nerves of many investors by hovering around $20,000. It has even ventured frankly below this level for a few days. And the least we can say is that the current uncertainties in the financial markets are hovering intensely. Not only, the FED would maintain its monetary tightening as long as it does not have what it wants. But even worse, the strength of the dollar would not play in favor of a return of risk appetite.
From a graphical point of view and by dint of hammering it, the significant thickness of the future Kumo in weekly units would not be likely to reassure investors about a trend reversal during the first quarter of 2023. Well that this potential scenario would remain pretentious, it would take a heck of a boost to propel BTC prices to the right side of the barrier in the long term.
In any case, the fourth quarter is likely to be very sporty for the king of cryptos. So much so that there are still doubts about liquidity in the cryptocurrency market, like the reserves of Tether, which itself is seeing its market capitalization gradually reduce.
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