Mt. Gox repayments, tensions on the US dollar and rates, political uncertainties, whales hunting for liquidity: all these elements are combining to put pressure on the Bitcoin price. In which price zone could the BTC bear purge end?
The end of the difficult period is near
Although disinflation has resumed in the United States according to the two inflation indices, the CPI and the PCE in the underlying version, The Bitcoin price is back in the lower part of the trading range that it has described since mid-March between 57,000 and 72,000 dollars.
Yet even Jerome Powell, the chairman of the Fed, acknowledges the resumption of progress in disinflation and the leading indicators allow us to be very optimistic for a pivot by the Fed during the monetary policy decision on Wednesday, September 18.
This optimism about the FED's pivot for the month of September is reinforced by the progressive deterioration of the labor market in the United States with an unemployment rate in contact with the FED's alert threshold of 4.1% of the active population.
An underperformance that is all the more surprising for BTC as the S&P 500 continues to set new historical records with an efficient rotation between the stars of US tech and the shares of GAFAM.
Now more than 73 days from the last halving, this downward pressure on BTC may seem surprising to the novice retail trader, but not to the eyes of high-capital investors, the whales.
The latter continue to accumulate long positions as soon as BTC falls below $60,000, a distribution from weak hands to strong hands which is a confirmation that the underlying trend remains bullish.
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This first part of the month of July is volatile for BTC for several reasons which are provisional:
- Reimbursements to Mt. Gox customers defrauded in 2014 have begun, bringing short-term selling pressure;
- Recent upward tensions on rates and the dollar linked to political uncertainties in France and the risk of a resurgence of the sovereign debt crisis in Europe;
- A seasonality which is not yet favorable to BTC;
- A technical hunt for liquidity orchestrated by the strong hands to force the weak hands to capitulate.
Market lows are formed in an environment of extreme fear among retail traders on the stock market. This stage is in sight on BTC, which, between 50 and 60,000 dollars, is in a hyper-interesting price zone from a long-term perspective.
Graphical representation of the US inflation rate according to core PCE, the FED's favorite inflation barometer
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Bitcoin, drops between $50,000 and $60,000 are a long-term opportunity
From a technical analysis perspective, I continue to believe that the worst-case scenario is a final bearish purge below the 200-day moving average. This scenario has already occurred several times on the Bitcoin price and on the TOTAL 3 index (the altcoin index) before seeing the market stabilize and then resume its underlying bullish trend.
Concretely, a final drop would be between $50,000 and $55,000, which would then be a superb opportunity for a long-term investment. Because be sure that such a price of BTC will make people dream at the end of the year when the market will have since taken the direction of $100,000.
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BTC/USD chart showing Japanese candlesticks in daily data
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Vincent Ganne is a recognized expert in technical analysis with 18 years of experience. He frequently appears on BFM Business and produces exclusive analyses for Cryptoast Research. With his extensive experience, Vincent offers a global approach to financial markets, taking into account macroeconomic events and using many aspects of graphical analysis to forecast the trends of Bitcoin and other cryptocurrencies in the medium and long term. He also held the position of Senior Market Analyst & Business Development Manager for 3 years at TradingView, thus reinforcing his in-depth knowledge of financial markets.
Vincent Ganne
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