FX.co ★ BTCUSD: Is crypto winter ending soon?

Crypto winter still dominates the digital asset market, but the first glimpses of a thaw are giving their fans optimism. Bitcoin is poised to end July with the best monthly performance since 2021 as global risk appetite improves. An increase in the federal funds rate by 75 bps expected by investors to 2.5%, followed by Jerome Powell's statement that it has reached a neutral level, and a technical recession in the US hint that the end of the monetary restriction cycle is not far off. As a result, all risky assets raised their heads. And bitcoin is no exception.

What is called a bear market for stocks, bonds, and other traditional assets has been called a crypto winter for tokens. This stage occurs when a particular instrument loses 20% or more of its value from the levels of recent peaks. For BTCUSD, the figure reached 62%. As a rule, a sharp collapse follows from the beginning, after which prices settle for a long time at relatively low levels. Bitcoin has not been able to break above 25,000 since mid-June. At the same time, most investors believe that without a rally above 28,000–29,000, there can be no question of any change in the downward trend.

Dashing trouble began! In July, the leader of the cryptocurrency sector added about 30% of its value. It has not grown as fast as its main competitor Ethereum, encouraged by the news of the transition of the underlying Ethereum blockchain to a more efficient stake verification system, but BTCUSD bulls are full of hope that this is only the beginning.

The dynamics of bitcoin and ether

While news of the cryptocurrency market, such as the collapse among crypto-lenders and investors, as well as tighter control of tokens by regulators, affects the mood of traders, the monetary policy of the Fed remains the main driver of pricing. It was the colossal monetary stimulus to save the economy drowning in a pandemic recession that allowed BTCUSD to reach all-time highs. The Fed intended to remove these stimulus with the completion of QE and the start of the cycle of raising the federal funds rate that sent bitcoin to an 18-month low.

Today, investors hope that their forecasts about the start of the third stage in the form of a slowdown in the Fed's monetary restriction will come true. CME derivatives expect the rate to peak at 3.3% in 2022, followed by a decline in 2023 to pull the US economy out of recession. Data on the decline in GDP for the second quarter in a row only fuels this idea, contributing to the rally of US stock indices by 8% from the levels of the June bottom and the steady growth of BTCUSD. Is it time to get rid of crypto winter?

Technically, the "Splash and Shelf" pattern was clearly played out on the BTCUSD daily chart with an initial test of the upper limit of the consolidation range of 19,000–22,000 and a subsequent retest. We continue to hold the longs formed from 22,000 and increase them on breakouts of resistance at 24,350 and 25,300 within the framework of the previously announced plan.