Bitcoin (BTC) starts a new week after its worst April performance ever. This situation also affects altcoins such as SHIB, DOGE, ETH. The monthly close has placed BTC/USD firmly within the established 2022 trading range, with fears already looming over $30,000 or lower. So, what will happen in the coming days? Here are the details…
The first of the developments that will affect Bitcoin, SHIB and coins: FED meeting
Macro markets are nervous as another FED meeting is approaching this week, as we have reported as Kriptokoin.com. With inflation rising rapidly around the world, Fed Chairman Jerome Powell is expected to fulfill his previous promises and announce significant rate hikes. How severely and how quickly interest rates are charged is a matter of debate, and a separate debate concerns whether markets are currently “pricing” the various options.
Any shock is likely to cause at least temporary volatility in the markets, and crypto has been no exception in the last six months. Therefore, attention is drawn to the Federal Open Markets Committee (FOMC) meeting on May 3 and 4. Also, next week, with the release of the US consumer price index (CPI) data for April, we will see the focus shift back to inflation. Macro analyst Alex Kruger summarized the developments in the market in recent months as follows:
Fed came first. Then Netflixpocalypse. After the Russian invasion. Then sanctions. Then it was the Fed and the biggest treasury dump ever. This week has been a win. The Fed will make another statement next week. The Fed’s statement on Wednesday will determine the fate of the market.
$28,000 for Bitcoin?
Although gaining some ground later on, it reaffirmed its desire to trade at least in a short-term narrow range, well below the top of the trade corridor in BTC/USD. Expectations were high that April would outperform, but the worst April in Bitcoin’s history ended with a total loss of 17.3 percent, according to the data. For this reason, analysts are approaching cautiously. Chris Dunn, a trader, summed up his expectations for the market as follows:
BTC chart is currently in a busy state and a break below $35,000 might cause a rush to exit… But I don’t trust breakout patterns in this range. Last year we saw short squeezes and traps with all-time highs. It’s risky to predict, better to react… I would like a $26,000 breakout.
Dunn is not alone in calling for capitulations that could push the market to $30,000 or below. In one of the few tweets about Bitcoin’s volume profile, analyst Matthew Hyland said, “Speaking of capitulation, I believe Bitcoin should go below $30,000. There has been low volume since May of last year bringing BTC to $30,000. Low volume = low turnover of buyers and sellers. “Going below 30,000 will unlock buyers who bought before $65,000 in early 2021.”
US dollar strength continues to push
April arrives It may have passed, but the US dollar index (DXY) remains solid. On May 2, DXY continues a breakout that saw the dollar hit its highest level since 2002. DXY soared to record highs of 103.4. Glassnode uses the following phrases:
Currently, the inverse relationship between Bitcoin and DXY […] is that if the index stays above the 102 DXY resistance level, it could weaken Bitcoin, and price action, especially at $35,000 and below, could be reversed. It shows that he can return. The rising DXY can be attributed to the tightening of monetary policy. The development of the USD largely depends on the Fed’s course of action. Rising inflation and a possible 50 basis point rate hike in early May could strengthen DXY.
Trader: illiquid supply more important than price drop
Last week saw a new record for the proportion of Bitcoin supply that has been dormant for at least a year – 64 percent. According to Glassnode’s Idle Supply Change indicator, large increases have occurred in the overall segment of BTC supply that can no longer be purchased in recent weeks. The result is that the Idle Supply Exchange has reached levels not seen since late 2020, when BTC/USD started showing signs of a “supply shock” as market participants piled into the already firmly “held” asset class. In his statements on this subject, analyst Michael Van de Poppe used the following expressions:
This number reaches the highest figures we have seen in 2020 (accumulation). Ultimately, the ‘illiquidity’ of so many cryptocurrencies adds to the potential for a possible supply shock. Yes, the market may still see a new low where the bear market continues and the $30,000 level could be reached. But basically the data tells a lot.
BTC, SHIB, DOGE sentiment “passes” macro
crypto sentiment even as traditional market sentiment remains tense, which could be a silver lining under current circumstances points higher this week. The Crypto Fear and Greed Index, which deals with the sentiment towards cryptos such as SHIB, BTC, ETH, which saw a two-week low with 20/100 last week, has now come out of the “extreme fear” zone. Currently, the index is at 28 points.
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