Into Crab Mode, Bitcoin Bullish Potential Capped For The Coming Months?

Bitcoin is back below $20,000 and looks set to retest the bottom of its current range. The cryptocurrency was showing signs of recovery, but was rejected near the critical resistance area around $22,000.

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At the time of writing, BTC price is trading at $19,800 with a loss of 3% and 2% in the last 24 hours and 7 days, respectively.

BTC trends to the downside with sideways movement in recent weeks on the 4-hour chart. source: BTCUSD TradingView

In a modern market ModernizationThe trading desk, QCP Capital, addressed the factor that may contribute to the BTC price moving sideways for the foreseeable future. This included the anticipated recovery of Mount Gox and global inflation.

Regarding the potential for Mt Gox payments to negatively impact the Bitcoin and crypto market, QCP Capital writes:

It’s impossible to ascertain the exact effect, given the crisscrossing arguments and the many theories surrounding the release. Our main takeaway is that there is a high chance that the market will be flooded with bitcoin supplies soon.

In a best-case scenario, Bitcoin will face negative pressure allowing Ethereum and other digital currencies to have some breathing space. The sector may post some gains after a long period of bitcoin’s rising dominance.

The worst case scenario is additional selling pressure for bitcoin, QCP Capital said, and the entire crypto market pushing prices to annual lows or deeper into bear market territory. Much depends on the opening schedule of Mt. Gox, and if victims are to succumb to market uncertainty or wait for BTC price to regain previous highs.

QCP Capital has made the following prediction about what Bitcoin could hold in the short term.

We are not completely bearish at these immediate levels but we do believe that sudden demand for buying structures may have pushed the risk reversal levels slightly higher. Our base case is still trading sideways with the risk of sharp declines and covering the upside (…).

What could put Bitcoin back into the green

Tomorrow, the US will publish a new Consumer Price Index (CPI) report. After a strong shift in monetary policy from the US Federal Reserve (Fed), market participants expect a decline in this metric.

If the CPI print indicates a decline in inflation, the cryptocurrency market may see some relief. $18,600 and $22,000 will continue to act as key support and resistance levels.

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In addition to analyst Ali Martinez shown Bitcoin stands at an “important demand wall.” There are 570,000 BTC addresses bought around their current levels, and to the upside $20,900 is the next level to watch in case of bullish momentum, as shown in the chart below.

Source: IntoTheBlock via Ali Martinez

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