Hodl investors see nothing but misery as a new altcoin meltdown combined with macro pressures. Also, for various reasons, Bitcoin (BTC) dropped 12% in 24 hours. The collapse in BTC price also affected popular altcoins such as SHIB. Thus, we have seen a market trading in the red overall in the last 24 hours.
Bitcoin SHIB and altcoins bearish
Bitcoin (BTC) hit its lowest weekly close since December 2020. Then, he started the new week with a different ending feeling. BTC has been in a bearish trend since May. In addition, the decline that continued until this morning shows that the leading cryptocurrency is approaching a 10-month low again. Last week’s shock inflation data from the US caused a chain reaction among risky assets. Thus, liquidity in the crypto market fell over the weekend. As a result, the prices of cryptocurrencies such as BTC and Shiba Inu (SHIB) fell sharply.
Macro factors continue this week as well as last week. The Federal Reserve (FED) will make its first official policy update this week since inflation figures. The Fed is expected to release broader information on interest rate hikes and the overall economy. Analysts have a mostly bearish outlook on both Bitcoin and altcoin prices. At least in line with the historical patterns of Bitcoin’s halving cycles, it’s likely to present painful conditions before it goes bullish. So what awaits the markets this week? What are the factors that will affect the prices of cryptocurrencies? Let’s examine together.
Celsius marks Bitcoin and SHIB price collapse
It took a long time to arrive. However, Bitcoin has emerged from the narrow gap it has been trading in since its first drop to 10-month lows last month. BTC price bounced off $23,800. Then it circled the $30,000 zone for weeks. The leading cryptocurrency failed to make a decisive move up or down. Now, that direction seems clear, although not exactly as investors would like it to be. Trader and analyst Rekt Capital talked about BTC price on June 12. According to Rekt Capital, the range in which the Bitcoin price comes out is not just a range. BTC/USD is also leaving the region around $30,000, a macro trading range that has been in place since early 2021.
At the time of writing, the market recalled the facts of what happened during the buying pressure below $24,000 in May. At that time, the blockchain protocol Terra’s LUNA and UST tokens collapsed. However, this weekend fintech platform Celsius and its CEL token followed suit. During the day, the CEL lost 40% of its value. This, predictably, happened after Celsius’ decision to stop withdrawals and transfers altogether to “stabilize liquidity.” Bitcoin experts reacted to Celsius. Experts were already skeptical of the altcoin space after the Terra debacle. However, they blamed the events in Celsius for the BTC price drop.
BTC and SHIB could drop if the FED raises interest rates
Given the already shaky macro conditions, probably the last thing Bitcoin needs is a black swan event replicating Terra. . Regardless, the Fed’s Federal Open Markets Committee (FOMC) will begin on June 15. At the meeting, it is discussed that the FED may increase interest rates to suppress US inflation. After the 8.6% inflation reading on June 10, expectations are that the meeting will accelerate the pace of key rate hikes. If this happens, stocks and altcoins like SHIB will be negatively impacted. Bloomberg says that as market prices rise, interest rates could rise by 75 basis points by the end of the year.
USD gains value
Where risky assets have suffered, the USD has used most of its strength over the past two years. Macro conditions reveal that this trend will continue. The US dollar index (DXY) has pulled back in recent weeks. Now, however, it’s back in business and is targeting the highs of 105 seen in May. These reflect the highest dollar strength since 2002. Since the cross market crash in March 2020, DXY strength has been a reliable counter-indicator for BTC price. Until a significant trend change enters, the outlook for Bitcoin may therefore remain skewed to the sell side. The strength of the dollar often leads to contractions in corporate earnings globally.
US dollar index (DXY) 1-day candlestick chart. Markets in extreme fear
Looking at the cryptocurrency market sentiment this week, it’s no surprise that the macro mood is getting worse. As we reported on cryptokoin.com, the Fear and Greed Index, which uses a number of factors to determine general conditions among traders, is swaying on the verge of dropping to single figures. Having spent most of 2022 in an area traditionally reserved for market bottoms, the index has yet to convince anyone that the bottom has been found. The index shows 11/100, which is just three points above macro lows in March 2020. This is a negative indicator for BTC and SHIB price.
The poverty index is alarming
Last week’s inflation pressure brought similar results to traditional markets, according to data from CNN. Accordingly, the Fear and Greed Index in the traditional market dropped to 28/100. It was not only the financial world that felt this model, called the “Poverty Index”, which measures inflation and unemployment. The index is showing signs that economist Lyn Alden describes as “not great.” “Given how much debt and income there is now compared to the past, it’s no wonder consumer sentiment is at record lows,” Alden said.
Will Bitcoin go up?
Given the current circumstances, Bitcoin bulls to shed light on the dark clouds can be considered a thing of the past. However, there are many who see the current market pattern as a golden opportunity if used correctly. One of them is Filbfilb, co-founder of DecenTrader. The founder recently shared on Twitter and described Bitcoin as the opportunity of his life:
“Let’s be clear, many short and medium-term problems are known to everyone. However, if you survive this period and get your moves right, BTC will be the opportunity of a lifetime.”
Like others, Filbfilb attributed BTC performance to equities. He also said that the average hodler is blind to the “overly leveraged” conditions that still exist on exchanges. Another analyst, VentureFounder, has contextualized Bitcoin in the currently four-year halving. Meanwhile, he said that the most painful scenario could happen in the coming weeks. If this happens, BTC and SHIB price will bottom and then rise.
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