Key Takeaways:
- Bitcoin falls seven weeks in a row.
- More declines anticipated due to a stronger dollar prospects.
- FOMC meeting, inflation data on calendar.
YEREVAN (CoinChapter.com) — Bitcoin (BTC) has fallen by almost 40% in the last seven weeks to wobble around its psychological level of $30,000. Unfortunately, the next seven days show no signs of decisive bullish retracement thanks to mounting macro risks.
FOMC meeting, inflation data
Bitcoin trades like a risky asset, given its consistent positive correlation with the U.S. equities against many anti-risk catalysts, including a stronger U.S. dollar and a super-hawkish Federal Reserve.
Again, the new week appears to be dictated by the same macro parameters. It begins with the release of the minutes of the Federal Open Market Committee’s (FOMC) meeting in April, which would reveal more details about May’s 50 basis points (bps) rate hike.
A hawkish tone coupled with confidence in the U.S. economic health would further boost tightening bets. So, one can expect the dollar to continue its uptrend, despite falling by 2.35% in the last two weekly sessions. Our best guess behind the greenback’s decline is interim profit-taking, meaning the bullish continuation will—you know—continue, hurting Bitcoin.
On Friday, the dollar could get a further upside boost from the Fed’s preferred inflation data: the PCE core deflator, which expects to show a decline in inflation—4.9% y/y in April from 5.2% in the previous month. But like the core CPI data, which also came lesser-than-anticipated, the PCE data would not likely deviate the Fed away from its hawkish path.
Bitcoin to $25K?
Bitcoin holds above $30,000, but the next global market selloff could have the cryptocurrency down in sync, opening ways to test the next psychological support levels near the $25,000-26,000 area.
Technicals agree with the bearish scenario. In detail, Bitcoin’s primary downside target following the next breakdown comes to be near $20,000, according to its bear pennant setup. This bearish continuation pattern sends the price down by as much as the height of the previous downtrend when measured from the breakdown point.
The downside target may not necessarily be reached this week. But an inclination to achieve it might have Bitcoin cross through the $25,000-26,000 area.
