Bitcoin posted a huge positive divergence early on Monday, after seven days of trading below $30,000. The cryptocurrency is trading at $30,536.93 at the time of writing, down 2.5 percent from the previous week, according to Coingecko data.
In the past 24 hours, the worldwide cryptocurrency market capitalization has increased by nearly 2 percent, to nearly $1.3 trillion. However, the total volume of cryptocurrency trading increased by more than 28% to $62.13 billion.
Bitcoin has struggled in recent weeks as the US Federal Reserve raised interest rates and inflation continued to rise, raising the possibility of further monetary tightening.
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Bitcoin is no longer a hedge against coins. Economic inflation?
In the past, Bitcoin has been recommended as a hedge against inflation, but in recent months it has proven to be closely correlated with risk assets, such as the Nasdaq 100, which has fallen in response to broader market volatility.
Over the past 10 days, the price of bitcoin has been flat, consolidating around $30,000. Bitcoin may find it difficult to regain its former glory, as investors seem to be avoiding riskier assets in the current inflationary environment.
According to Mudrex Co-Founder and CEO Edul Patel:
“Despite an increase of nearly 3 percent in the past 24 hours, Bitcoin has not been able to breach the $30,000 threshold. Over the past week, the price of Bitcoin has remained unchanged, as it struggled to break through its support level.”
The Dow Jones Industrial Average (DJIA) has fallen for nearly eight consecutive weeks, and major indices have followed suit.
With the S&P 500 dropping, the strong connection between it and the crypto markets became apparent. BTC ending the week at $30,000 marks its seventh consecutive weekly close in the red, according to Darshan Bateja, CEO and co-founder of Fold.
BTC total market cap at $578 billion on the daily chart | Source: TradingView.com
For his part, famous crypto analyst Lark Davis wrote:
“Bitcoin is showing massive bullish divergence on a daily scale. The last time something similar happened was in 2021. Could this herald a massive rally?”
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The next two crucial weeks for Bitcoin
Noel Acheson and Conrad Lesser of Genesis Global Trading said in a note on Saturday that the price of bitcoin is likely to fluctuate between $29,000 and $31,000 over the next two weeks.
According to Atchison and Laiser, some releases of economic data, such as US GDP or inflation numbers, “may change the narrative.”
According to the analysts at WazirX Trade Desk, the monthly trend of BTC has broken below the ascending channel pattern.
Meanwhile, the next resistance level for BTC is expected at $40,000, while the closest support level is at $24,000.
Bitcoin’s monthly RSI is currently at 47, the lowest in more than two years. The support level for the RSI is 43, according to analysts.
Featured image from Al Bawaba, chart from TradingView.com