Despite Bitcoin’s recent rise to the critical level of $26,100, which marks a critical juncture for its future gains and stops further drops, there are alarming signs that could cause Bitcoin bulls short-term worry.
A market correction could result from the confluence of these variables.
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The unexpectedly high headline inflation rate for the US in August, coming in at 3.7% vs. the previous month’s 3.2%, is one factor. It does not signal a fundamental shift, but the probability of a future rate increase has increased somewhat, to 53%. This development is highlighted by multi-asset investor Jeroen Blokland.
Additionally, according to Mike McGlone, senior macro strategist at Bloomberg, Bitcoin might be setting a downward trend. McGlone adds that Bitcoin is an “exceptionally liquid” asset that has seen tremendous growth without being connected to any particular undertakings or obligations.
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The fact that it arose at a time when interest rates were historically low, however, is significant given its position as a possible leader in a market reversion.
US Inflation Data And Rising Interest Rates Pose Challenges For Bitcoin Bull Run
The rollover of Bitcoin’s 20-week moving average (MA), which has implications for all risk assets, is one important indicator that McGlone highlights.
Being one of the best-performing assets ever, Bitcoin’s downward trend is an important finding. According to McGlone’s analysis, federal funds futures for the following year are generally above 5%, which indicates that nothing is expected in the way of Federal Reserve (Fed) liquidity.
McGlone also emphasizes the long-standing connection between Bitcoin and the larger market. Prior to the S&P 500 seeing a similar trend in the third quarter of 2020, Bitcoin’s 20-week moving average touched its bottom following the liquidity boost brought on by the switch to zero interest rates in early 2020.
According to Mike McGlone’s analysis, all risk assets may be affected by shifting interest rate dynamics, which raises questions regarding Bitcoin’s performance in the future. Investors and market participants will closely examine Bitcoin’s price trend and its capacity to withstand the pressures of rising interest rates as its 20-week moving average begins to roll over.
BTC’s Battle With Resistance, Will It Break Through Or Face A Seven-Month Low?
As noted by NewsBTC, the market’s top cryptocurrency, Bitcoin (BTC), is currently having trouble breaking over the $26,400 barrier level.
The most notable increases in the last 30 days have been seen within the last seven days, with a moderate surge of 1.9%, whereas BTC has only been able to gain 0.3% over the last 24 hours.
BTC’s Ongoing Battle
Last 30 days challenging, down 12% to $25.8k. High-risk environment, lingering bearish momentum.
Expecting a volatile week ahead, especially with Binance's inflation stats pending.
Direction uncertain.
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In contrast, if BTC has a prolonged downturn and gives up its recent moderate gains, bitcoin bulls must carefully watch the $25,150 level, which is a key support level.
BTC’s bull run and the gains made since the year’s beginning could be put in jeopardy if this level is breached, sending the price down to a seven-month low of $22,000.
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