"A slight thaw." What will happen to bitcoin in the next week
Experts explained the reasons for the growth rate of the first cryptocurrency above $21 thousand and predicted further market movements in the short term
On Sunday, November 6, bitcoin is trading at $21.2 thousand, its price rose by 2.2% over the past week. Experts have analyzed the situation on the crypto market and told what dynamics to expect in the next seven days.
"Investor sentiment has changed."
BitRiver financial analyst
From October 30 to November 6, bitcoin traded "in the plus." The key events of the outgoing week were the U.S. Federal Reserve meeting and the U.S. labor market report for October. Bitcoin was under pressure along with other risky assets before the rate decision was announced. In the first half of the day, buyers had to retreat from $21.08k to $20.2k.
On November 2, the Fed raised the interest rate by 75 bps to 3.75-4.00%, continuing its fight against inflation. The dollar reacted by falling. The S&P500 rose to 3,895.8p. The BTC/USDt pair jumped to $20,800.
The decision coincided with investors' expectations and the regulator also hinted at slower rates of monetary policy tightening in the future. Then J. Powell came on the scene and "ended the party" - he said it was premature to talk about a pause in the tightening cycle and saw the rate higher. Apparently, he hinted at a rate hike to 5% per annum. A pause from the 4.50% and 4.75% levels had previously been expected.
Investor sentiment in the markets changed immediately. The S&P500 index fell 5% to 3,694.0. The dollar index has recovered to 113.03 p. The pair BTC/USDt decreased from $20.8 thousand to $20 thousand.
After J. Powell's speech, traders switched their attention to the U.S. labor market report that came out on Friday (Nov. 4). The report caused sharp price fluctuations in all markets (stock, currency, cryptocurrency, debt and futures).
The number of jobs in October was higher than expected despite the Fed raising its interest rate. Nonfarm payrolls rose 261,000 for the month (forecast was 200,000), while the unemployment rate rose to 3.7% (forecast was 3.6%).
The dollar rose on the report, while US indexes declined. Bitcoin also fell at first to $20.35K. It didn't fall long. Market participants bought out the fall before the weekend. The dollar index collapsed to 110.59, outpacing the gains after Powell's speech.
Risky assets survived the U.S. Fed meeting and the U.S. labor market report painlessly. Buyers now have until December 14 to make new monthly highs. Apparently, investors don't want to miss Black Friday and the Christmas rally.
BTC/USDt has recovered to $21.48, ETH/USDt - to $1.68. Bitcoin can go to the zone of $22.3-22.5 thousand. The faster buyers will fixate above $22.5, the higher the probability of a rally to $25 thousand. The buyers' success will depend on the dynamics of the dollar and U.S. stock indices.
A strong influence on the crypto market will come from the US inflation report for October, which will be released on November 10 at 16:30 Moscow time. The market expects a rise in inflation in monthly terms and a decline in annual terms. By November 10, buyers should definitely push the price above $22,500 as the CPI report is important to the U.S. Federal Reserve.
"The downtrend could intensify."
Bestchange Senior Analyst
Although our long-term outlook remains moderately negative, in the short term we expect a slight thaw and a rise in the bitcoin price. We tentatively expect the price to be around $23K, which will bring bitcoin closer to its maximum range established in the last nearly 5 months.
There will be two factors contributing to it. The first factor is connected with depreciation of dollar against other reserve currencies. That is, the value ratio in the dollar-bitcoin trading pair will continue to move towards bitcoin as a more stable asset in the current situation.
The second factor may be a redistribution of cash flows within the market. The recent "dog-eat-dog" rally triggered by Elon Musk's fans led to unjustified price increases for several tokens associated with his persona [solely due to associations created in the community].
Despite the outstanding results of individual projects in the past two weeks, globally the market remains in a downtrend and there is no reason to believe that any of the factors contribute to the reversal. However, without additional media support, all tokens from the list of associated with Musk may begin to quickly lose market share and investors will start to transfer assets to a more stable and fundamental asset - bitcoin. Thus, the first cryptocurrency is highly likely to get additional support next week due to investments from "meme" token sales.
However all occurring can end with false break of price range "up", that in turn will provoke investors more actively to open long positions on the margin market, and it can lead to sharp turn and strengthening of the downtrend due to self-supported wave of liquidations. With a sufficient margin of strength in this impulse, it may even lead to the transition of bitcoin into a new range, the upper boundary of which will be below $18 thousand. It is unlikely to happen in the next week, but such a risk should be very seriously considered in their planning.
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Author: soft4bro.com (06/11/2022)