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Bitcoin Corrects Lower From Highs
The rally in Bitcoin over late 2022/early 2023 motivated a lot of bulls and encouraged a lot of retail traders to re-enter the market, hoping the next big crypto bull run would take place. However, since those highs printed in April, Bitcoin prices have corrected sharply lower. A combination of shifting Fed expectations and negative news-flow linked to the crypto space has been weighing on investor sentiment. However, its important to note that while BTC prices have certainly moved lower recently, we are nowhere near the levels seen at the lows last year and for now the move remains very much corrective. So, the question is, can crypto recover from here or are we headed back to those lows?
Where to Next? Fed in Focus
While negative news-flow has certainly been an issue for crypto, the reactions to these events prove to be short-lived. News on Monday that the SEC is suing Coinbase for regulatory breaches saw BTC drop sharply before buyers stepped in to drive price back up. This is broadly the dynamic we’ve seen around negative news-flow all year. So, the bigger issue for BTC is the Fed and USD. With the Fed now pegged to go for a ‘hawkish pause’ this month, BTC prices might struggle near-term, particularly if the forward guidance leans towards projecting further rate hikes. In this scenario, the correction might continue lower. However, longer-term, the stage look set for a crypto revival at the point that the Fed turns more neutral, which might come after the summer or later into the year.
Technical Views
BTC
The correction lower in BTC has seen the market framed by a well-ordered bear channel. For now, the channel can be viewed as a bull flag, suggesting room for an eventual break higher through the channel highs and the 27415 level. If we do see such a move develop, this will put focus back on the 32185 level as the next hurdle for bulls. To the downside, 24930 is the next key support to watch, a break of which opens the way for a move down to 21445 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.