During the current week, the main cryptocurrency in the world has not shown anything special. It seems that bitcoin needs the same boost as the British pound this Friday. The pound sterling also could not overcome an important support level for many weeks, but when negative factors piled on it from all sides, it immediately collapsed by 200 points. Bitcoin also continues to walk on the edge of the abyss. If earlier it was at least supported by an ascending channel, and as for the fundamental background, it could be said that it is ambiguous, now the quotes of the "bitcoin" have fallen below the channel, as well as below the Ichimoku cloud, so technical signals are now talking about a new drop in the cryptocurrency, and not about the beginning of new growth. And it turns out that now the fundamental background continues to oppose all risky assets, and the support of the technical factor is leveled. We continue to expect a new drop in the value of the first cryptocurrency.
What about the "foundation"?
The news of the last week can hardly be called important for the cryptocurrency market. Just as it is difficult to link all the fundamental events of the past week with the movement of bitcoin. However, if we consider that bitcoin fell by $ 2,000 on Thursday and Friday, then we can assume that Jerome Powell's speeches were not received by crypto traders with a bang. Recall that the main risk for "bitcoin" is the tightening of the Fed's monetary policy in the next one and a half to two years. Moreover, we are not talking about one or two rate increases, but at least 10 increases. At the end of the entire policy tightening cycle, the rate should be at least 3.5%. By the end of this year, it should reach a neutral level of about 2.5%. In addition, starting from July, the Fed may start selling bonds from its balance sheet by launching the QT - "anti-QE" program. That is, now the Fed will withdraw excess liquidity from the economy to extinguish inflation.
Even if you don't understand how the tightening of monetary policy affects the economy or the cryptocurrency market, just draw a simple parallel. In 2020-2021, the Fed conducted a $ 120 billion-a-month QE program. And these are the funds that entered the economy under this program. In total, the money supply would increase only in the USA by one and a half times in two years. The rates were lowered to almost zero. During the same period, bitcoin grew from $ 6,000 to $ 70,000. Thus, if rates are going to rise now, and the excess money supply is withdrawn, then bitcoin will have to become cheaper. Of course, the big question is exactly how much "extra money" will be withdrawn? However, considering that the QT program has not even started yet, and the rate has been raised only once, the worst for the cryptocurrency market is ahead. We are still waiting for bitcoin to be near the level of $ 31,100.
On the 24-hour timeframe, the quotes of the "bitcoin" were fixed below the Ichimoku cloud and the ascending channel. Thus, sales with targets of $ 34,267 and $ 31,100 have become relevant again at this time. The level of $ 40,746 now acts as a kind of pivot, around which the price has been spinning in the last few months. In a way, this level is the weighted average price of bitcoin. However, we believe that this level will not save the cryptocurrency from a new fall.