Despite Bitcoin\u2019s recent recovery to the key level of $26,100, signaling a crucial point for its future gains and preventing further decline, there are worrisome signals that could raise concerns for Bitcoin bulls in the short term. <\/p>\n
The combination of factors presents a potential perfect storm for a market correction.<\/p>\n
One contributing piece is the higher-than-expected<\/a> US August headline inflation, coming in at 3.7% up from the previous month\u2019s 3.2%. Although not a game-changer, it implies that the odds of another rate hike are marginally up, now standing at 53%. Jeroen Blokland, a multi-asset investor, highlights this development.<\/p>\n Additionally, Bloomberg\u2019s senior macro strategist, Mike McGlone, suggests <\/a>that Bitcoin may be leading a downward trend. McGlone emphasizes that Bitcoin is an \u201cexceptionally liquid\u201d asset that has experienced significant appreciation without being tied to specific projects or liabilities.\u00a0<\/p>\n However, since it emerged during a period of historically low-interest rates, its position as a potential frontrunner for a market reversion is noteworthy.<\/p>\n One key indicator highlighted by McGlone is the rollover of Bitcoin\u2019s 20-week moving average (MA), which has implications for all risk assets.\u00a0<\/p>\n Being one of the best-performing assets in history, Bitcoin\u2019s reversion lower is a significant observation. McGlone\u2019s analysis reveals that federal funds futures for the next year hover above 5%, indicating limited expectations for liquidity from the Federal Reserve (Fed).\u00a0<\/p>\n A similar pattern was observed in Bitcoin\u2019s mean reversion at the beginning of 2022 when futures began pricing for the current tightening cycle. <\/p>\n As the lower bound of the federal funds rate rapidly rises from zero to 5.2% and is expected to continue increasing, significant pressure on all risk assets, including Bitcoin, may ensue.<\/p>\n McGlone also highlights the historical relationship between Bitcoin and the broader market. Following the liquidity injection resulting from the shift to zero interest rates in early 2020, Bitcoin\u2019s 20-week moving average reached its bottom before the S&P 500 experienced a similar trend in the third quarter of that year.\u00a0<\/p>\n Mike McGlone\u2019s analysis raises concerns about Bitcoin\u2019s future performance amid changing interest rate dynamics and the potential impact on all risk assets. As Bitcoin\u2019s 20-week moving average shows signs of rolling over, investors and market participants will closely monitor its price trajectory and its ability to withstand the pressures of rising interest rates.\u00a0<\/p>\n At the time of writing, the leading cryptocurrency in the market, Bitcoin (BTC), is facing a challenge in surpassing the resistance wall at $26,400, as highlighted<\/a> by NewsBTC.\u00a0<\/p>\n Over the past 24 hours, BTC has managed to gain a modest 0.3%, while the most significant gains in the last 30 days have occurred within the seven-day timeframe, with a modest surge of 1.9%.<\/p>\n Should BTC succeed in surpassing its immediate resistance, it will encounter the formidable 200-day and 50-day moving averages (MA) at levels of $27,000 and $27,100, respectively. These levels pose significant hurdles for the cryptocurrency\u2019s prospects and potential future gains.<\/p>\n Conversely, if BTC experiences an extended decline and relinquishes its current modest gains, Bitcoin bulls must closely monitor the crucial threshold at the $25,150 level.\u00a0<\/p>\n A breach of this level could potentially drive BTC down to a seven-month low of $22,000, jeopardizing the cryptocurrency\u2019s bull run and the gains achieved since the beginning of the year.<\/p>","protected":false},"excerpt":{"rendered":" <\/p>\n Despite Bitcoin\u2019s recent recovery to the key level of $26,100, signaling a crucial point for its future gains and preventing further decline, there are worrisome signals that could raise concerns for Bitcoin bulls in the short term. <\/p>\n The combination of factors presents a potential perfect storm for a market correction.<\/p>\n One contributing piece is the higher-than-expected<\/a> US August headline inflation, coming in at 3.7% up from the previous month\u2019s 3.2%. Although not a game-changer, it implies that the odds of another rate hike are marginally up, now standing at 53%. Jeroen Blokland, a multi-asset investor, highlights this development.<\/p>\nUS Inflation Data And Rising Interest Rates Pose Challenges For Bitcoin Bull Run<\/h2>\n
BTC\u2019s Battle With Resistance, Will It Break Through Or Face A Seven-Month Low?<\/h2>\n