Bitcoin (BTCUSD) has emerged as a leader among risk assets, showcasing remarkable gains amidst the broader landscape marked by risk-off sentiment.
With a substantial 21% increase year-to-date and a notable streak of four consecutive weeks of gains, Bitcoin has garnered significant attention from investors. However, this week presents a different narrative, as Bitcoin faces a modest decline of 1.85% week-to-date, largely attributed to the impact of Wednesday’s FOMC Minutes on market dynamics.
The Dollar’s resurgence, fuelled by reinforced expectations of prolonged higher interest rates, has cast a shadow over Bitcoin’s rally. As indicated by the CME FedWatch Tool, market sentiment reflects diminishing probabilities of a rate cut in May, underscoring the evolving landscape of monetary policy. Looking ahead, the forthcoming release of the PCE Price Index stands as a pivotal event for global markets, particularly amidst ongoing sensitivities surrounding inflation. The reaction from the Federal Reserve’s preferred inflation gauge may further shape market expectations regarding the trajectory of interest rates and subsequent implications for Bitcoin’s performance.
Technical
Bitcoin has demonstrated a robust uptrend, maintaining its position above the 100-day moving average, signifying bullish momentum in the market. The recent surge originated from the support level at 48327.81, indicating a strong foundation for the upward movement. However, as buying pressure subsided, the rally lost steam, leading to a consolidation phase characterised by a rectangle pattern.
This sideways movement suggests a temporary equilibrium between buyers and sellers, with neither side gaining dominance. A breakout from this pattern, whether to the upside or downside, could potentially dictate the next directional bias for Bitcoin. A high-volume breakout above the pattern may indicate a continuation of the uptrend, with the 54000 psychological level emerging as a significant resistance point. Conversely, a breakdown below the consolidation pattern could signal a shift in sentiment towards the downside, potentially leading to a retest of the 48327.81 support level.
Summary
In conclusion, Bitcoin’s resilience amid risk-off sentiment highlights its growing prominence as a leader among risk assets. Despite a modest decline this week, its robust uptrend above the 100-day moving average remains intact, with pivotal support at 48327.81. The outcome of the PCE Price Index release next week will likely influence its trajectory.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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