"Pass the resistance." What will happen to bitcoin in the coming week
The specialist analyzed the situation in the market and assessed the prospects of bitcoin movement in the next seven days.
"For bitcoin and indices, the data is bad."
BitRiver financial analyst Vladislav Antonov
Bitcoin maintained a sideways movement in the New Year's week from January 2 to January 8. Since the beginning of the year it tried to develop an upward movement but remained trading below $17,000. The key events of the week were the FOMC meeting minutes and the US labor market report for December.
After the FOMC minutes were published on Wednesday (January 4), the BTC/USDt pair rose to $16,991 without continuing growth. The subsequent drop in the S&P 500 index caused bitcoin to correct to $16,777. The correction was subdued as investors' attention immediately shifted to the U.S. labor market report for December.
FOMC members were happy to see lower inflation in October and November, but would like to see more evidence of inflation reaching its highs. As such, they ruled out a rate cut in 2023. Because of this, investors did not pay much attention to the minutes as they do not understand whether there is a recession in the US now or will start soon, and which leading indicators to watch to predict the future actions of the US Federal Reserve.
U.S. stock indices rebounded on Friday (Jan. 6) after the release of U.S. labor market statistics. In the absence of negative news in the crypto industry during the week bitcoin followed the U.S. stock indices. The BTC/USDt pair recovered to $17,041.
In December, the number of jobs in the non-farm sector amounted to 223 thousand against the forecast of 200 thousand. The November figure was revised to 256 thousand from 263 thousand. The unemployment rate at the same time decreased by 0.1 percentage points, to 3.5%. Average wages rose 0.3%.
The data came out better than expected, with the dollar immediately heading south. It was a bit odd to see such a reaction to the positive report, as the data was better than expected and the US Federal Reserve will be able to continue to tighten monetary policy to fight inflation. The dollar index could continue to fall amid weak industrial production data and the service sector business activity index. The data came in below forecasts.
As of this writing, bitcoin is trading at $16,913. As the S&P 500 closed on the plus side, bitcoin had a time window to break through resistance in the form of the $17,000 level.
According to the technical analysis, the dollar index has formed a bearish takeover candlestick formation. I think that the data is bad for bitcoin and indices, so to continue the recovery it is necessary to pass the $17,500 level as soon as possible. In this case, sellers will begin to reduce short positions on cryptocurrencies in anticipation of continued growth.
It is desirable to pass the resistance before the speech of the head of the US Federal Reserve J. Powell. His speech is scheduled for Tuesday at 16:00 Moscow time. The key event of the new week will be the inflation report in the USA, which FOMC members and investors are waiting for. The report will be released on Thursday (January 12) at 16:30 The inflation rate is expected to drop to 6.5% from 7.1%.