Bitcoin (BTC) keeps everyone on their toes when it comes to price action – where will it go next?
BTC price down 10% after bad week
After a week of BTC/USD falling 10%, sentiment is recovering and traders are eyeing key support levels closer to $25,000.
At the same time, the consensus on market health is far from unanimous – with some believing that the next phase of the upside is just around the corner.
As macro markets prepare for a new period of crucial Federal Reserve data and moves, volatility catalysts are waiting in the wings, with Bitcoin possibly not staying quiet for long.
Cointelegraph takes a look at the upcoming scenarios that could see BTC/USD break out of its short-term sideways trading pattern.
Will the Fed expose the market’s bluff?
This week may have been quiet on macroeconomic triggers, but that is about to change.
From April 27th, new data will emerge from the US that could bring a volatility boost for currently lackluster risky assets.
US GDP and jobless claims will precede the March print of the Personal Consumption Expenditure (PCE) Index, the latter of which is closely watched by the Fed for clues on inflation.
Timing this month is important – a week later the Fed will decide how much, if any, to raise interest rates. While the market already thinks it has the answer, this can add even more surprises to sentiment and price action.
According to CME Group’s FedWatch tool on April 25, there is an 87% chance that the Fed will hike rates by 0.25% in early May.
Fed target rate probability chart. Source: CME Group
Cold feet surface over US stocks
Bitcoin remains correlated with US stocks through the end of the month, and concerns beyond crypto center on the indices’ inability to make new highs.
For trading company Mosaic Asset, caution is warranted going forward for a number of reasons.
“First, the rally since mid-March has resulted in a sharp increase in bullish sentiment and signals too much greed among investors. There is also a large negative broad divergence over multiple periods in the stock market rally since mid-March,” it warned in the latest edition of its regular newsletter, The Market Mosaic, published April 23.
An accompanying chart showed declining bullishness across all S&P 500 stocks, indicating a potential change in environment from the first quarter.
“Just look at the percentage of stocks that are trading above their 50-day moving average (MA),” she continued.
“When the S&P was trading at similar levels in early February, nearly 81% of stocks were in solid uptrends, as shown by the arrows. But look at where things are now with the circles. As the S&P 500 finds itself back to similar levels, only 41% of stocks are in uptrends.” S&P 500 with % stocks above 50-day moving average. Source: Mosaic Asset
Bitcoin tended to reverse on the liquidity sweep
A bullish stance from some Bitcoin market participants is focusing on sweeping range lows to continue the bull run.
Also See: ‘Smart Money’ Sees BTC Bull Run: 5 Things to Know in Bitcoin This Week
Supporters are eyeing a mid-$26,000 area with the potential to surpass Bitcoin’s 200-week moving average at around $25,850.
“Bitcoin is still moving sideways here, which means it may sweep the bottom one more time and then turn back up,” Michaël van de Poppe, founder and CEO of trading company Eight, told Twitter followers on April 25.
“I still reckon it will take me a long time over the next few days.”
An accompanying chart confirmed $26,600 as the downside target for the liquidity sweep.
Annotated BTC/USD chart. Source: Michael van de Poppe/Twitter
Popular trader Jelle, meanwhile, has become a voice who believes the worst of the correction is over and has contributed to mockery over the past few days.
“The direction of the higher timeframe is clear, this is just one of many corrections on the way up. Buy the blood, sell the euphoria. Don’t get it twisted,” read some of the Twitter comments.
Jelle also sees similarities to February’s BTC price action, but anticipates a positive breakout thanks to a bullish divergence on the Relative Strength Index (RSI).
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This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.
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