Schedule of the day: we understand the contradictory drivers of bitcoin



Bitcoin has been falling for the fourth of the last five days, having updated at least four and a half months in the process. You can select several sale drivers at once:

The possibility of adjusting the Fed’s monetary policy;

New restrictions from China’s Regulators;

Refusal of Tesla (NASDAQ:TSLA) to accept Bitcoin as a payment instrument;

Recent comments by former President Donald Trump, who described the leading digital currency as a “fraud against the dollar” and called for “very strict regulation.”

However, the cryptocurrency also has a potential support factor in the form of a possible reduction in the bloated balance sheet of the Federal Reserve System. At the same time, Skybridge Capital (a hedge fund with $ 7.5 billion under management and more than $310 million in bitcoins) claims that BTC and gold will not be affected by the tightening of US monetary policy.

Nevertheless, Deustche Bank believes that the US may face the strongest surge in inflation in history due to unprecedented government spending and ultra-soft monetary policy. The bank’s experts believe that price pressure may reach the levels of the 1940s or 1970s. High inflation undermines the purchasing power of the dollar, prompting investors to transfer funds to safe haven assets (one of which is bitcoin).

Bitcoin – Daily Timeframe Bitcoin – Daily timeframe

Bitcoin continued to decline after yesterday’s breakdown of the lower boundary of the “bearish” wedge (although by the time of writing, it had strayed from the session lows). The breakdown of the model suggests that the available demand has dried up, and sellers have been forced to lower prices in search of new buyers.

The completion of such figures often triggers a chain reaction in the form of closing long positions and triggering pending sell orders. This combination attracts new players who see an opportunity to play in an obvious “bear” market. The implementation of this scenario will be a test for our May forecast, in which we assumed the growth of the currency. A drop below $29,000 will change our mid-term estimate.

Technical analysis suggests that the price will fall to at least $29,000. The pennant, which has been forming for three weeks, looks like a short “respite” within the trend movement.

Usually, the target of the model is measured based on the height of the “flagpole”, which in this case is almost $ 27,000. However, given that such a collapse will incredibly devalue the currency and return it to $ 12,000, we tend to consider this scenario as unlikely. Therefore, it would be more logical to apply the rules for a symmetrical triangle (the period of equilibrium of supply and demand), the target level of which is postponed from the breakdown point and corresponds to the height of the model.

However, achieving even this (undoubtedly more conservative) target will lead bitcoin to the $26,000 mark, which implies a breakdown of the $29,000 support level, which we expected as part of our previous analysis.

One thing is for sure: the trip is going to be crazy, so hold on tight.

Trading Strategies

Conservative traders should wait for the breakdown of the $29,000 mark before opening short positions.

Moderate traders can sell on a rollback to the broken border of the pennant and confirmation of the predominance of the offer.

Aggressive traders can play down from current levels by adjusting the trading plan in accordance with their own budget constraints, preferred time frames of the position and risk appetite.