Bitcoin trends are headed lower towards the bottom of the range created in July when the cryptocurrency hit a multi-year low of $17,600. Now, Bitcoin appears set for further losses on the lower time frames as the macro forces remain in control of the global markets.
At the time of writing, Bitcoin (BTC) is trading at $19,000 with a loss of 1% and 3% in the last 24 hours and 7 days, respectively. Other cryptocurrencies are following the general sentiment in the market as many are giving away their profits on the lower time frame apart from XRP.
Bitcoin trapped between global macro forces
According to trading desk QCP Capital, after the “merger” of Ethereum, the migration process from Proof-of-Work (PoS) to Proof-of-Stake (PoS) consensus has been successfully completed, and The sector has lost its last bullish narrative. Now, macro factors are the only thing that influences.
Thus, Bitcoin, Ethereum and other cryptocurrencies are increasing their correlation with traditional assets and moving more and more in tandem with global economic forces. In this sense, the upcoming CPI print for September may put additional selling pressure on the bitcoin price.
The US Federal Reserve (Fed) is trying to combat high levels of inflation, as measured by the consumer price index, by raising interest rates and cutting its balance sheets. This causes a negative impact on the value of almost every asset class except the US dollar. QCP Capital wrote:
The US dollar continues to buy, with real returns on the dollar outperforming every other asset class to date. Commodities and precious metals show bleak numbers (…). The consolidation of global macroeconomic sentiment has sent correlations across assets back to extremes. Bitcoin’s correlation with stocks and gold (positively correlated) is at all-time highs (…).
However, their attempts were futile as inflation has proven resilient and may continue to the upside. The CPI reading for next September, which will be published next Thursday, will provide further clues to the current macroeconomic situation. QCP Capital said:
In this regard, all eyes are on the Federal Reserve and therefore on the CPI printed on Thursday, as uncertainty remains high. Sell-side economists expect a rise of nearly 0.4% m/m and 6.5% y/y in core CPI, as a result of strong shelter inflation.
If the Fed insists on raising interest rates, Bitcoin is likely to head lower in the short term. QCP Capital views “strong” demand in US jobs sectors as a potential negative as it contributes to measures of inflation and encourages the financial institution to keep financial conditions tight.
Bitcoin Whales Pushing BTC Down, See Below?
The Fed is already under pressure from US allies to halt their interest rate hike program, but to no avail. However, this pressure may contribute to a shift in the position of the financial institution in the long run.
In the meantime, with the economic situation continuing at extreme levels, Bitcoin’s upside potential will remain limited. In the shorter time frames, data from Material Indicators shows an increase in sell orders from investors (purple in the chart below) with buy orders ranging from $100,000 to $1 million.
As long as this trend continues, any attempts to regain previous levels will lead to rejection as it has been happening over the past weeks.
#FireCharts CVD shows that historically, $100,000 to $1 million (purple) whales have had a greater impact on # bitcoin Pricing from Mega Whales (brown) with market orders ranging between $1 million and $10 million. Keep this in mind when trying to swim with the capsule. pic.twitter.com/eVCqM5UTWo
– Material Indicators (MI_Algos) October 11 2022