Bitcoin price faces correction as economy is not cooling as anticipated
The economy is cooling less than anticipated. The job market has soared, inflation rates are high, and the housing markets are unstable. These are just a few macro factors currently affecting the price of bitcoin.
Bitcoin price action
Bitcoin continues to trend in the financial world today, with records of some minor price corrections. BTC currently trades at an average of $22,846. This is a 2.44% decrease from its price 24 hours ago and a fraction of the drop in the past hour.
At the beginning of last week, bitcoin’s value dropped to a mere $22,700. This was highlighted recently in a Twitter thread focused on crypto market analysis. According to the study, the Bitcoin plunge brought about a contagion that impacted many assets, causing downtrends. The general crypto market cap reduced vastly due to BTC’s decline.
However, despite starting the week in a plunge, bitcoin recovered, hitting the $24,150 mark on Feb. 2. This is the highest value per bitcoin since Aug. 17 – a six-month high.
Consequently, the price surge was short-lived as bitcoin took a bearish turn on Feb. 3, as the weekend loomed. Just over twenty-four hours ago, on Feb. 5, bitcoin was trading at $23,400.
The 24-hour high and low stood at $23,200 and $22,709 when writing this report, a price difference of over $500.
Despite losing value, bitcoin’s market dominance remained high in recent hours. The dominance stands at over 41%. Interestingly, as the prices plunged, the volumes have recently been surging. In the past 24 hours, the network’s trading volumes hit a high of $21.9 billion, surging by nearly 42%. The surge in trading volumes could be the driver of the recent price actions, with some still expressing confidence in the coin.
BTC price correction is ongoing
Bitcoin’s current price direction indicates an impending price correction. The coin’s most immediate resistance level currently stands at the $23,600 mark. With the coin trading below $23,000, it will take a lot for BTC to surpass the immediate resistance.
However, in such an event, BTC will face a stronger secondary resistance at $23,900, with the tertiary resistance at $24,100. However, with the current direction, bitcoin will unlikely shoot to hit its next resistance level.
On the contrary, bitcoin could take a negative tone. Barcharts indicate that the closest support level for the coin is currently at $22,700. Interestingly, this coin has dropped below its first two major support points at $23,100 and $ 22,900.
With the direction already negative, BTC is already facing a solid correction. If BTC breaks below the last support level, it could drop even further, triggering longer time bears.
Analysts believe economy is not cooling
In the tweet highlighted earlier, the author noted that the currently robust job market is a “negative signal that suggests the economy is not cooling as much as other economic data indicates.”
A recent report suggests that over 517,000 new jobs were created in the US this January, reducing the unemployment rate to 3.4%. Initially, Wall Street Economists anticipated only 185,000 new jobs. Despite the release of the report, bitcoin still tanked.
The thread highlighted that many investors are concerned about whether the recent downtrend is a pullback to a more extended bear market or a minor setback before bulls.
Inflation is one economic factor contributing to ongoing price actions. Despite the Fed’s continuous efforts to cut down inflation, the number is still at the high of 8.5%. The Fed is already planning more interest rate hikes.
Moreover, the housing market is also experiencing problems, with some rumors suggesting a possible crash. The news of a possible recession and the surging mortgage rates are inflicting more pressure on the housing market.
In addition to that, there is still controversy over student loans still ongoing. These combined factors put massive pressure on bitcoin, hence the current negative price actions.