Bitcoin and Ethereum could be headed for worst month since November without major positive news
As debt ceiling talks weighed on crypto investors last week and the latest Fed minutes also showed central bankers were divided on the direction of rate hikes, Bitcoin’s correlation with gold has retreated from this year’s all-time highs to start behaving more aggressively like a risky asset.
Crypto market analyst Yuya Hasegawa said Bitcoin is currently testing its March resistance at around $28,800.
The crypto market has been lacking in liquidity stimulation recently. "In the medium term, funds will be withdrawn from riskier assets and used to purchase government bonds. The result may be a further slowdown in trading volume and liquidity in the stock and digital asset markets," research analyst Matteo Greco said in his report. , and have a potentially negative impact on prices”.
After a long period of unusually low volatility, Bitcoin's next major price move could be imminent and could push BTC to $32,000, according to James Check, chief on-chain analyst at Glassnode. This price level is where Bitcoin’s “true cost basis lies,” Check said.
To calculate Bitcoin's average cost basis (the average price to buy BTC) Check and his team removed forever lost or dormant coins from the calculation, focusing on active Bitcoin investors. "That's where the level of mean reversion is, so honestly, it wouldn't surprise me to bounce back to that level," he said.
Despite this bullish scenario, Check also noted that a large number of investors may be tired of the bear market and wait for Bitcoin to reach that level before selling, putting pressure on the price: “This is the area where you start to encounter more resistance” .
Bitcoin’s price action is closely tied to macroeconomic conditions. Bitcoin has been held back below $30,000 in recent weeks amid headwinds such as a strengthening U.S. dollar index (DXY), a rebound in interest rates and the possibility of further rate hikes by the Federal Reserve.
In his tweet, Glassnode co-founder Yann Allemann analyzed the possibility of a Bitcoin rally amid changes in DXY and interest rates.
According to Allemann, the U.S. dollar index — DXY — which measures the greenback against a basket of six major currencies, has been a key factor influencing bitcoin’s price. The strength of DXY is inversely related to Bitcoin, which means that when the US dollar index strengthens, Bitcoin generally weakens, and vice versa. The expected turning point of DXY at the 106-107 level may indicate a bullish position for Bitcoin.
Additionally, a shift in macroeconomic conditions could boost Bitcoin’s momentum. Congress will vote on the legislation as early as Wednesday, and it remains to be seen whether the debt-ceiling agreement can pass on Wednesday.
With bitcoin currently trading at $27,071, bitcoin and ethereum could be headed for their worst month since last November if there is no major positive news.
(Data source: Mary Liu)