Bitcoin faced significant selling pressure, dropping by 7% to hit a two-month low near $56,000 following Federal Reserve Chair Jay Powell’s speech on inflation. Powell’s remarks about keeping interest rates higher for longer to combat stubborn inflation negatively impacted Bitcoin prices. Despite stabilizing near $57,000, Bitcoin remains vulnerable to volatility with market sentiment.
However, some positive signs are emerging. The launch of spot Bitcoin ETFs in Hong Kong, although met with a short-term price decline, might follow a historical pattern of an upswing in the coming week. Additionally, Coinbase’s strong Q1 earnings report highlights the growth potential within the cryptocurrency industry, driven by user adoption and institutional interest.
Technical Analysis
Bitcoin is currently trading around $59,300, attempting to build on modest gains. The price action sits precariously below the downward-sloping 50-SMA (blue line) and 100-SMA (orange line), with only the 20-SMA (green line) offering some minor support. This indicates a potential short-term downside bias.
The RSI (45.84) remains below 50, further suggesting bearish momentum. However, a sustained break above the 20-SMA could see a retest of the $62,178 resistance. A decisive break above this level could reignite bullish momentum towards the $65,212 and $68,829 resistance levels.
On the downside, a failure to hold above the 20-SMA could trigger a drop towards the $56,500 support level. A confirmed break below this level could exacerbate the bearish trend, potentially targeting $53,621 and $50,941.
Summary
Market sentiment remains cautious. The upcoming US jobs data could significantly impact risk appetite and, consequently, Bitcoin’s price. A strong report might weaken Bitcoin due to potential Fed tightening, while a weak report could trigger a rally. Additionally, the recent launch of spot Bitcoin ETFs presents a mixed picture. While some analysts view it as a bullish sign, the initial price drop after the launch in Hong Kong raises concerns. The technical indicators suggest a slight upside bias, but the overall environment remains uncertain.
Sources: TradingView, Trading Economics, Reuters, CoinBase, and CoinTelegraph.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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