Why “Low” Capitulation Might Hint At More Pain For Bitcoin Price


Bitcoin price remained stuck in a narrow range after yesterday’s US Federal Reserve monetary policy announcement. Macroscopic forces dominated global markets increasing correlation across all asset classes.

For an in-depth look at how the Fed’s 75 basis point rise affected the price of bitcoin, and a look at the internal dynamics of the crypto market, check out the analysis from our Managing Editor Tony Spilotro. The link is below:

At the time of writing, the bitcoin price is trading at $18,900 with a loss of 2% and 7% in the last 24 hours and 7 days, respectively. The entire top ten cryptocurrency by market capitalization has posted losses in similar time periods except for XRP which continues its bullish trend with a gain of 29% over the past week.

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BTC price is moving sideways on the 4 hour chart. source: BTCUSDT TradingView

Why Bitcoin Price Needs to See More Capitulation

As NewsBTC reported yesterday, the cryptocurrency market completed every major short-term price catalyst with Ethereum “merging.” Now, the market moves in tandem with macroeconomic factors and traditional markets.

This may provide room for a comfortable rally or further decline if the major financial indicators are trending in one direction or the other. According to Jurrien Timmer, Macro director of investment firm Fidelity, there has been a “little surrender” to the S&P 500.

Despite the fact that the stock index has been in a downtrend since hitting an all-time high of 4,819 to its current levels of 3,837, Timmer believes that the market has been resilient and may need to see more capitulation before a bottom is formed. Via Twitter, the expert said the following sharing the chart below:

Surprisingly, there is so little capitulation in the market. Yes, the polls are all negative, but the actual flows weren’t. This seems consistent with no volatility in the market (…).

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The S&P 500 is far from its 2020 lows. Source: Jurrien Timmer via Twitter

The above coincides with analyst Dylan Leclerc’s look at past bitcoin cycles. The analyst believes that Bitcoin is bottoming out after the mining sector’s “final capitulation”. This event may cause a network hash rate crash, which has yet to be seen. leclear He said:

I think with macroeconomic conditions as a catalyst, something similar will repeat. We haven’t gotten there yet.

Will Bitcoin Retest 2020 Lows?

But how low will the price of bitcoin and the cryptocurrency market go? The benchmark cryptocurrency is already trading 80% below its all-time high of $69,000. This has historically been a bottom for BTC price and a barrier to further declines.

In this sense, rather than a new slump, the cryptocurrency may see more sideways movement during 2022 as the Fed continues to raise interest rates and traditional markets trend lower. This hypothesis may be supported by a potential downward pressure on the US Dollar (DXY).

The coin has been trending higher, moving opposite the price of bitcoin and the risky asset, but it appears to be in a critical resistance zone. This may provide the cryptocurrency market with room for a relief rally. As shown in the chart below, the DXY indicator could be on top to see a surge in selling pressure.

Bitcoin Price Index DXY Chart 3
DXY (US Dollar) is entering resistance. source: Jackis (@i_am_jackis) via Twitter





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