Sunday, February 25, 2024

Bitcoin price rallies to $32.3K, but three factors could limit its recovery


Bitcoin (BTC) price motion has been surprisingly bullish since Might 27. Weekends, particularly vacation weekends, are notoriously risky and indecisive, with main whipsaws in price actions being the norm. Even in bull markets, bearish price motion is usually the norm, but BTC bucked that pattern.

BTC/USD each day chart (Coinbase) Supply: TradingView

Bitcoin rallied practically 11% between Might 27 and Might 30, transferring by the important $28,600 degree to transfer again above $30,000 to $31,700. The weekly shut was the best shut of the previous twenty days and it gave bulls the strongest three-day run in over two months. Nonetheless, macroeconomic fears might weigh on any additional upside potential.

World meals scarcity fears mount at commodity costs rise

The worldwide meals provide is a major but simply neglected issue contributing to Bitcoin’s future price potential. Because the starting of the Covid-19 pandemic, governments worldwide have shut down their seaports and airports, successfully reducing off and interrupting the stream of products. This disruption will take years to return to regular, but that’s not the first reason for concern.

In the US, fertilizer prices have risen exponentially over the previous 18 months. In January 2021, the Fertilizer Price Index stood at $78.83 and is at the moment at $254.97, rising practically +225%. A mixture of provide chain disruptions and continued shortages is probably going to proceed disrupting this market.

Fertilizer price index Supply:

Particular person commodity costs proceed to rise and are a major contributor to the regular rise in inflation. Specifically, wheat (CBOT: ZW) hit new all-time highs in February 2022 and stays close to these all-time highs. In simply 2022 alone, wheat futures have elevated as a lot as 76% and over 143% prior to now 18 months.

Wheat futures (ZW) weekly chart (CBOT) Supply: TradingView

Oil futures (NYMEX: CL) proceed to rise and are actually buying and selling at ranges not seen since July 2008. There are broad issues by merchants and traders that oil might spike towards $150 per barrel as soon as China ends its COVID shutdown. When that happens, demand will most definitely return and additional influence oil.

Crude oil futures (NYMEX). Supply: TradingView

Progress issues within the inventory market

Fairness markets across the globe proceed to face vital strain. Rising inflation, hovering commodity prices, provide chain disruptions and the battle in Ukraine have put risk-on traders and merchants on the defensive.

A number of high-impact financial occasions are scheduled to happen this week, which can probably pause any main price motion strikes in equities and cryptocurrencies. The European Union unemployment knowledge launch comes on June 1, together with the Financial institution of Japan’s rate of interest choice and manufacturing knowledge. As well as, US unemployment numbers and non-farm payroll knowledge shall be launched on June 3.

Including to a busy week, on June 3, three former US Federal Reserve Presidents are additionally slated to converse: John Williams and James Bullard speak on June 1, Lael Brainard on June 3.

Technical ranges might limit Bitcoin’s recovery to $37,000

Bitcoin is coming off a brand new historic report of 9 consecutive weekly losses. Because the starting of the present weekly candlestick, patrons have returned and have pushed BTC above the complete buying and selling vary of the previous two weeks and effectively above the 50% vary of the flash crash on the Might 9, 2022 weekly candlestick.

If Bitcoin price can shut above the each day Kijun-Sen at or above $31,350, then BTC has a really open path to hit the $37,000 worth space. Moreover, the 2022 quantity profile could be very skinny, between $32,000 and $37,000. But $37,000 could also be the place the bulls face sellers once more.

BTC/USD each day Ichimoku Kinko Hyo chart. Supply: TradingView

If bulls need to ship a message to the market {that a} new uptrend is about to start, then they will want to push Bitcoin price to a each day shut close to $44,000. In that state of affairs, BTC would set off an “excellent bullish Ichimoku breakout”, giving bulls the trail wanted to retest the all-time excessive.

Whereas inventory costs stay in bear market territory and commodities stay at all-time highs, on the very least, a short lived reversal is probably going to happen. If the previous technical evaluation adage, “quantity precedes price,” performs out once more, merchants ought to see meals commodities and oil sell-off whereas shares and Bitcoin rise.

The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Each funding and buying and selling transfer entails danger, you need to conduct your individual analysis when making a choice.