Bears Are Back as Bitcoin Falls to a Key Resistance Level of $21,000
Bitcoin is dramatically slipping down; it has been losing value steadily over the previous few days. The BTC price has gradually fallen below the 200-weekly moving average to a trading level (WMA). The token’s value has dropped by over 14% over the last week and is currently trading at $21,160.77.
BTC Bears are Back
The bulls’ presence in the previous weeks caused BTC’s price to soar to over 25,200. This value remained at BTC’s new all-time high for more than two months following the crushing blow of the negative crypto market. However, the performance this week abruptly halts the price’s upward trend. The bears have returned, and the entire trend has changed.
The price of bitcoin has moved away from its overpriced area. This move led to a retracement from its immediate resistance level this week. Additionally, it has been noted that whales and other long-term investors sell their holdings. BTC dropped and traded between $23,000 and $24,000 during this quick sell-off.
Along with the price of Bitcoin falling, that of altcoins and other cryptocurrency tokens also plummeted. The whole cryptocurrency market has been red as the downward price trend intensifies. At this time, the market attitude is unfavorable. The crypto market Fear and Greed Index, which fell from 47 to 30 over the week, is evidence of this.
Once the sell-off lowers the price of BTC, the bulls are likely to retract. To manage the trending pattern, the bears appeared. The price is less than the $23,000 200-weekly moving average (WMA). Notably, the price could fall below $21,000 if bears are present.
Bitcoin Price Drop: Analyst Opinions
The MVRV 7-day Detrend Oscillator has recently shown a bearish divergence flow in the BTC price pattern. Such a price trend predicts a price decline in the future. Therefore, there is still a chance that the price of Bitcoin will go below the $21,000 to $20,000 range.
The performance of the crypto market has changed due to other reasons. The Federal Reserve’s plans to raise interest rates significantly in the coming months dealt a fatal blow to the trend toward cryptocurrencies. Additionally, significant sell-off pressure and exchange inflows are contributing factors.
Regarding the current price trajectory of Bitcoin, certain crypto analysts in the industry have voiced their perspectives. These individuals include BigCheds, Crypto Tony, Michael van de Poppe, and Crypto Birb, who foresaw the BTC price falling under the $22,700 threshold in advance. The 200-WMA, in their opinion, will help to bring the level up.
Bitcoin Bulls Misjudging the Fed
After bottoming out locally at about $17,500 in June, the price of bitcoin increased by almost 45% while creating a rising wedge.
It’s interesting to note that the time when Bitcoin saw upward movement also happened to correspond with investors’ rising belief that inflation has peaked and that the Federal Reserve will begin lowering interest rates as early as March 2023.
The anticipation was raised by Fed Chairman Jerome Powell’s July 27 FOMC statement. Powell: “As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.”
However, the most recent Fed dot plot reveals that most experts believe that rates would rise to 3.75% by the end of 2023 before falling to 3.4% in 2024. Therefore, the likelihood of rate decreases is still hypothetical.
James Bullard, president of the St. Louis Federal Reserve, said he would back a third straight 75 basis point increase at the central bank’s policy meeting in September. The Fed has pledged to reduce inflation from its current rate of 8.5% to 2% in keeping with the declaration.
In other words, the pressure on Bitcoin and other risky assets, which entered a bear market when the Fed started an aggressive tightening cycle in March, should continue for the foreseeable future.
