Technical tension is at a high level in the crypto market as the bitcoin price has been facing major technical resistance at $31,000 since late June. Equity market indices are also under resistance and market interest rates have returned to their pre-March banking shock level. On the eve of the update of the US NFP report, bitcoin is very close to making its technical choice for its July trend.
US federal government bond rates under very close surveillance
Almost 4 months after the US regional banking crisis, Western financial markets are again in a difficult situation with respect to funding costs. The credit market, the largest of all asset classes in terms of stock volume, is seeing its bond rates return to the level that triggered the bankruptcies of some US regional banks in March, constraining the Federal Reserve at the time. (FED) to set up an emergency liquidity plan.
While this same FED is giving no sign of easing its monetary policy (underlying inflation is still far too high), market interest rates are reaching levels that may again put businesses, banks and some consumers at risk.
Within all of these interest rates, it is the 10-year US government bond yield that is the benchmark for judging the absolute level of financing costs on the market. Since the introduction of restrictive monetary policies by Western central banks, each time this bond rate exceeded the 4% measure, it triggered bankruptcies in the Western financial system; the value of this interest rate is 3.97% at the time these lines are put on “paper”.
As we are on the eve of the publication of the NFP report in the United States, the update on Friday July 7 of statistics on the American labor market, high finance is hoping for a bearish reversal of this “benchmark” rate in order to avoid a new shock on risky assets on the stock market.
Regarding the price of bitcoin, the bearish reversal of bond rates in March had allowed a strong upward impulse and the overcoming of the resistance at $25,000.
Clearly, it is imperative that the US 10-year bond rate does not exceed the zone of 4 or 4.20% to allow the price of BTC to finally overcome the major technical resistance of $31,000.
Chart made with the TradingView site and which shows the 10-year US federal government bond rate
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The upside potential if bitcoin manages to break through the resistance at $31,000
Let’s talk about this resistance at $31,000, which the market has been facing since the culmination of the bullish impulse of the banking crisis at the beginning of last April. You must understand that this resistance is of weekly dimension because identified on the weekly time horizon chart (it is in particular the SSB of the ichimoku system).
As shown in the graph below, it is also from 31,000 dollars that selling liquidity appears en masse, in short it is therefore a champagne cork ready to pop, but it still has to be triggered.
The market could take its time, take a long break before trying to breakout. On the other hand, be certain that the day when this resistance jumps, then the price of bitcoin will spin towards 36,000 dollars.
Graph produced with the TradingView site and which reveals the weekly and daily Japanese candles of the price of bitcoin with, inset, the map of selling liquidities above 31,000 dollars
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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.
Vincent Gane
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