After the bearish triangle collapses, Bitcoin price faces the risk of retesting $30,000


Bitcoin (Bitcoin) The price looks ready to retest $30,000 as traders continue to withdraw upside bets from the spell of bearish technical patterns.

This structure is called a symmetrical triangle and is formed when assets fluctuate between two convergent trend lines.

In doing so, the asset rebounds after testing the lower trend line of the triangle as support, and then falls back after seeing the upper trend line as resistance. Eventually, it broke the range, moving in the direction of its previous trend, and dropped the maximum distance between the upper and lower trend lines of the triangle.

Why is it 30,000 USD?

Bitcoin trended within a similar triangular integration pattern until it finally broke below the lower trend line of the structure. As a result, the possibility of the flagship cryptocurrency changing its downside target close to $30,000 has increased. This is partly because the maximum height of the structure is less than $2,550, and subtracting it from the breakout point (~33,878) brings the price target closer to $31,308.

When Bitcoin consolidated within the price range of $30,000 to $40,000, a series of bearish and bullish reversal structures were formed. Source: TradingView

As Bitcoin tested $32,334 as its temporary support during the London session on Thursday morning, the bearish setup also surfaced. A slight rebound followed, bringing the price above US$32,600. However, due to the bearish divergence between price and trading volume, the rebound lacks additional upward confidence, which suggests that Bitcoin may resume its downward trend.

Peter Brandt, CEO of Factor LLC, a global trading company Suggest It was down to $30,000, although different indicators were used. The experienced trader discovered the BTC/USD exchange rate within the rectangular pattern, a price block that recently put Bitcoin in a mid-term bias conflict.

Bitcoin is stuck inside the rectangle. Source: Twitter, @PeterLBrandt

After falling back from the upper trend line resistance, the price is trading in the middle of the rectangle. Such a move usually causes the spot BTC/USD exchange rate to fall to the lowest rectangular support level, which is $30,000.

Fundamentals

Unsupported macroeconomic fundamentals partially contributed to the latest Bitcoin price drop.

The most important one is the minutes of the Federal Reserve meeting released at around 14:30 EST on Wednesday.As expected, U.S. central bank officials Suggest They may eventually withdraw support for the economy sooner than expected.

The minutes of the meeting stated, “A number of participants mentioned that, given the upcoming data, they expect the conditions to start slowing down the pace of asset purchases earlier than they expected at the previous meeting.” read.

The Fed’s new dot plot is expected to raise interest rates in 2023.Source: Bloomberg

Bitcoin often benefits from Loose monetary policy.

As the Federal Reserve lowered the benchmark lending rate to close to zero, the cryptocurrency surged from as low as $3,858 in March 2020 to as high as $65,000 in mid-April 2021, affecting the purchasing power of the U.S. dollar and starting to purchase government bonds and mortgages Backing securities are growing at a rate of 120 billion U.S. dollars per month, which depresses yields.

For clarity, the central bank’s asset purchase plan resulted in Inflationary pressure, Because they want to monetize a portion of government deficit spending. Such purchases tend to drive up the price of stocks and fixed income investments. Coupled with cheaper loans, the loose monetary plan increases legal liquidity in the system and strengthens Bitcoin’s narrative of an unlimited supply of dollars as a “premium store of value”.

As a result, investors began to turn to higher-risk safe-haven assets, including Bitcoin, in search of better returns. However, once the market’s concerns about the Fed’s downsizing intensified, Bitcoin began to fall. On Wednesday, after the minutes of the central bank meeting were released, Bitcoin fell from above $35,000.

Bitcoin reacted negatively to the minutes of the Fed’s June meeting. Source: TradingView.com

John Miller, a financial analyst associated with Seeking Alpha, pointed out that the Fed’s hawkish views offset its Chairman Jerome Powell’s goal of ensuring strong long-term monetary easing. In the latest meeting minutes, Powell said that the US economic recovery was weak, citing weak employment growth in June.

“The Fed’s loose balance sheet policy will continue to support increased liquidity in the banking system and support asset prices,” Miller wrote.

“Cryptocurrencies and encrypted assets with strong dynamic storage of value, such as Bitcoin, will perform well in this environment.”

Alexey Veledinskii, head of product at Digitex Ltd, a cryptocurrency spot and derivatives exchange, predicts that Bitcoin will hold $30,000 due to ongoing inflation concerns. He says:

“In the medium to long term, the main support of $30,000 can easily be bounced back to a more ambitious price point, towards $50,000 to $70,000.”

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