Bitcoin’s price has returned to its favorite psychological level, which it has been trading at for the past month. While technical analysis only provides half of the picture of why a catastrophe is unavoidable, examining the current status of the financial markets reveals the other half.
The interest rate in the United States has reached a 40-year high, according to Econometrics, and the Federal Reserve is expected to respond by decreasing interest rates.
Risky assets, such as the stock market, have been slashed in price in each of these occurrences. These risky investments began to rebound only after the recession ended. Gold, on the other hand, which is used as a store of value, had a far smaller drop and a much faster recovery.
Bitcoin has recently been heavily connected with the stock market, with no signs of separating anytime soon. This strong link appears to have begun after the COVID accident and continues to this day.
If this trend continues, there’s a good probability BTC will follow in the footsteps of risky assets and the stock market during prior recessions.
BTC Price To Drop Below $20K
Bitcoin price is forming a bear flag within an existing bear flag. The broader technical structure, as indicated in the last post, initiated a bearish breakout on May 6 and has been tumbling ever since.
This action has resulted in a 36 percent drop in a week. Looking at the broader picture, the pattern’s flagpole was generated by the drop from Bitcoin’s all-time high of $69,000 to $32,837 between November 10, 2021, and January 24, 2022.
The flag represents the consolidation that occurred after the sell-off and can be seen as higher lows and higher highs between January 14 and May 22. A flag is a parallel channel-like structure that ascends.
Flags are continuation patterns, and the forecast for this one is for the price to decrease to a target of around $20,000 in the near future. This is calculated by multiplying the height of the flagpole by the $38,305 breakout point, which was breached on May 6.
During the consolidation, the downtrend from the larger bear flag has created a smaller one. This technical setup, on the other hand, predicts a 30% drop to $20,000, demonstrating a confluence and bolstering the larger pattern.
While the Bitcoin price is currently negative, a daily or weekly candlestick close above $52,000 will disprove the bearish thesis by generating a higher high from a macro perspective. In this scenario, Bitcoin’s price could rise further and retest the psychological level of $60,000.
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Source: https://coinpedia.org/bitcoin/how-will-bitcoin-react-to-fed-interest-hike-on-june-15th-btc-price-preparing-for-brutal-sell-off/