Bitcoin loses $ 33,000 of support as US dollar inflation takes center stage
Bitcoin price fell to a support that could accelerate a retest of $ 30,000 on July 13 as the bulls failed to make new gains.
Data from TradingView showed another lackluster performance for BTC / USD on Tuesday with a local low of $ 32,240 on Bitstamp.
The spike above $ 33,000, seen as support as a stepping stone to the upside, appears to have had its biggest shock this week. The price fell below that level on Monday and soon recovered but was unable to hold out for 18 hours.
At the time of writing, $ 32,500 was in the spotlight, with Bitcoin slipping below what a trader believed a trader would need to hold to prevent a retreat near $ 31,000.
Michaël van de Poppe stated in an update on the previous Tuesday:
“The main support I have here is in the $ 32,600 to $ 32,900 range, where it must be held as support to avoid another re-test of the lows.”
With the temporary loss of this area, bearish sentiment should prevail in the lower timeframes.
Trader Crypto Ed even tweeted charts comparing current price action to the accumulation from Bitcoin’s surrender in December 2018, when it fell to just $ 3,100.
– Crypto_Ed_NL (@Crypto_Ed_NL) July 13, 2021
However, fundamentals continue to stabilize after seeing a local low. The hashrate is above 91 exahashes per second of the day, while the difficulty continues to prevent a new record correction down this week.
Wait for inflation data
The US dollar index, which shows the strength of the greenback against a basket of leading currencies, fell about 0.03% just before the London session.
Bitcoin and the dollar moved in opposite directions during the week of major inflation reports and a major Congressional declaration by Fed chairman Jerome Powell.
The U.S. consumer price index (CPI) is expected to rise significantly in June, showing rising inflation as the economy tries to recover from the slowdown in the Covid-19 pandemic. A Reuters poll of economists found the CPI could be up 0.5% from May and 4.9% year over year.
Many traders are betting on Bitcoin against the prospect of higher inflation, in part because popular stories predict Bitcoin as a hedge against central banks’ inflationary policies that affect the purchasing power of money.
“Inflation makes your savings account worthless.”
Specifically, the Fed has been running a monthly asset purchase program of $ 120 billion since March 2020. As a result, the policy of the US Federal Reserve doubled total assets to more than $ 8 trillion. Meanwhile, Bitcoin has soared up to 1,528% over the same period – from $ 3,858 to nearly $ 65,000.
Bitcoin has more than halved from its all-time high (ATH) in mid-April, but has maintained its general bullish bias by tirelessly holding $ 30,000 as the psychological price point. The support came in handy after two previous CPI reports showed inflation rose to 4.2% in April and 4.9% in May.
Gustavo De La Torre, Business Development Manager at N.exchange, said:
“The rise in the CPI is a sign that the economy has not yet fully recovered from the stresses of the Covid-19 pandemic and that the crypto market is on the hunt for negative inflation figures.
Gustavo De La Torre added that the lower Bitcoin price combined with the mixed economic outlook will spur more investors to accumulate.
“If the buying pressure increases, the Bitcoin price could rise to $ 40,000 in the short term.”
Consumer price index over the years | Source: US Bureau of Labor Statistics
In addition, CEX.IO’s Konstantin Anissimov warned of a possible restrictive reaction from the Fed to further inflation, noting that this could lead the central bank to relax its bond-buying program and cut rates earlier than expected.
“As the situation stabilized, the Fed increased its balance sheet to more than $ 8 trillion since early 2020 – a significant increase.”
Anissimov said, adding that the lower Bitcoin price will continue to serve as a suitable safeguard against inflation fears for the time being.
“Both Bitcoin and ETH are likely to retest new price levels of $ 45,000 and $ 3,000, respectively.”
Bitcoin enters the accumulation zone vùng
On-chain indicators continue to point to continued bitcoin accumulation. According to Glassnode data, companies with low sales histories continued to raise bitcoin from shaky investors until the end of last week, while net flows between exchanges fell to negative levels, suggesting traders were pulling bitcoins off exchanges for equity stakes.
Whale-Hold Bitcoin Supply with a balance of 1K-10K soared when it traded near $ 30,000 | Source: Glassnode
Will Clemente, an independent market analyst, said:
“Retail has been increasing its accumulation for weeks, but we finally got the whale push we’ve been waiting for … 17 new whales were born this week, and the total number of BTC held by whales has increased by 65,429 BTC.
According to Cointelegraph