Bitcoin price continued its bearish momentum this week as investors focused on the Federal Reserve’s extremely aggressive sentiment. BTC dropped to a low of $18,515 on Wednesday, slightly above this year’s low of $17,708. It is down more than 57% this year alone.
Bitcoin Crash Explained
Bitcoin has been in a strong bearish trend for the past few months as demand for the coin declined. Financial results from companies like Robinhood, Coinbase and Cash App’s Block showed that the number of people buying Bitcoin and other cryptocurrencies is on a downward trend. The same goes for people who trade BTC on decentralized exchanges like dYdX and Uniswap.
Inflation has also risen sharply in recent months. Recent data from countries such as the US, UK and those of the European Union showed that inflation has risen to its highest level in decades. As a result, central banks have been forced to intervene by raising interest rates at the fastest rate in more than a decade.
In the United States, the Fed has increased 225 basis points this year. Analysts expect it to rise 75 basis points on Wednesday. It will then point to further rate hikes of 0.50% for the remainder of the year.
As a result, Bitcoin and other cryptocurrencies have fallen, bringing the total market cap of all digital coins tracked by CoinMarketCap below $1 trillion.
Other financial assets were also under pressure. For example, US stocks have been the worst performers this year, with major indices falling more than 15%. Bond prices have all fallen, pushing their yields to their highest level in years. Commodities such as gold, copper and crude oil have also fallen.
Therefore, basically the best time to buy Bitcoin is when the Fed changes interest rates.
Bitcoin price prediction
The daily chart shows that the BTC price has been in a steep downward trend for the past few months. Subsequently, the currency has managed to move below the short and longer term moving averages.
A closer look reveals that the coin has formed a double bottom pattern at $17,708. Historically, a double bottom is usually a bullish sign. Therefore, a drop below this pattern will invalidate the bullish pattern.
As such, from a technical perspective, the right time to buy BTC is when it moves above the key $25,206 resistance. This is an important level as it is the neckline of the double bottom pattern.
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