The crypto market is retesting critical areas of support as the US Consumer Price Index (CPI) exceeds expectations. The metric is used to measure inflation in the US dollar, and registered An 8.6% increase year over year, the highest since 1981.
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This could make the US Federal Reserve more aggressive in its attempts to stem inflation. The financial institution began to tighten its monetary policy, which translated into a decrease in global liquidity, and the negative performance of risky assets, such as Bitcoin.
Bitcoin price has returned to $29,400 with a loss of 3% and 3.5% in the last 24 hours and 7 days, respectively. The cryptocurrency made several attempts to return to its previous highs, but market conditions contributed to the selling pressure.
pseudonym dealer Foot Two possible scenarios for Bitcoin in the coming months. The trader claims that the market seems to have two goals in mind for the number one cryptocurrency price: either more downside to $20,000 or a push up to $40,000.
As shown below, this trader believes that Bitcoin could drop to $25,000 before returning to its current levels. This scenario envisions Bitcoin forming a new range between the yearly lows and the $30,000 lows.
The number one cryptocurrency and the cryptocurrency market cap may look to have some respite later this year. However, rising inflation along with the Fed’s tightening cast a shadow over the bulls.
The second scenario envisions a longer BTC price range, but with less volatility. The trader said the following about these possible scenarios:
These scenarios may result in a painful and sluggish crab market throughout the summer. Space will end up feeling dead and empty. Just in time for some positive changes regarding the macro landscape later that might be a bullish catalyst for a breakout.
Can Bitcoin and Crypto Reach New Highs in 2022?
As inflation in the US appears to be getting out of control, the US Federal Reserve will continue to tighten by cutting its balance sheets and increasing interest rates.
Thus, the cryptocurrency market may experience even greater losses. Over the past months, with the rise in macroeconomic uncertainty, Bitcoin’s dominance has followed an upward trend.
As reported by NewsBTC, this metric has stood north of 40% in the past seven days but could return to its 2020 levels. At that time, Bitcoin alone made up more than 60% of the total cryptocurrency market capitalization.
If the economic narrative shifts its attention from reducing inflation to halting a possible global recession, Bitcoin and the cryptocurrency market may see some respite. It looks like this scenario will be over by the end of the year.
In any case, new highs seem unlikely for the crypto market. However, market participants should watch out for a shift in narratives as it may indicate potential upward momentum.