Broken Bitcoin, a falling red chart against a blurred blue background. Cryptocurrency bubble concept. Double exposure of the toned image
Bitcoin (BTC), the world’s largest cryptocurrency, has seen a period of stability around the $26,000 mark after Federal Reserve Chair Jerome Powell’s recent speech.
In his speech, Powell reiterated the central bank’s commitment to maintaining a 2% inflation target. As economists debate the implications of this target, market watchers, including Bloomberg’s Senior Macro Strategist Mike McGlone, have weighed Find out about the potential impact of a looming recession on the BTC price.
Is Bitcoin Facing a Bearish Outlook?
In his speech, Chairman Powell stressed the importance of implementing policies that were “enough restrictive” to address inflationary concerns. As economists continue to debate the merits of this approach, Powell’s emphasis on controlling inflation has sparked speculation in the financial landscape.
Mike McGlone, a respected senior macro strategist at Bloomberg, remains bullish on Bitcoin, which is often referred to as “digital gold.” However, McGlone predicts a potential drop in Bitcoin price, stating that a “normal reversal” during an economic recession could see Bitcoin trading around $10,000 or even as low as $7,500.
McGlone acknowledges Bitcoin’s volatility but emphasizes Bitcoin’s historical performance as an asset class, even in the face of a significant drop.
Additionally, McGlone notes that Bitcoin’s 100-week moving average (MA) is currently trending down, which suggests a negative market trend. The recent decline from the lows in 2022 and 2023 further supports this observation.
Additionally, Powell’s mention of ongoing Federal Reserve rate hikes adds to concerns about Bitcoin’s macroeconomic outlook.
Still, comparing Bitcoin to the stock market in 1921 and 1929, he sees cryptocurrency as a revolutionary technology with the potential for long-term growth.
DXY is approaching its following resistance lines as seen on the 1-day chart. Source: DXY on TradingView.com
DXY is approaching its following resistance lines as seen on the 1-day chart. Source: DXY on TradingView.comAdding to concerns about Bitcoin’s near-term growth, the US Dollar Index (DXY) is trending higher, thereby losing its previous correlation with BTC, raising concerns for the market’s leading cryptocurrency.
As NewsBTC reports, the DXY is approaching significant resistance levels in the near term. However, it is worth noting that favorable conditions, increased trading volume, and renewed inflow of liquidity in the burgeoning cryptocurrency industry could potentially present an opportunity for BTC to rally and reach higher price levels.
The DXY is currently trading at 104.169 points and is approaching two key resistance levels. First resistance stands at 104.716, second at 106. These levels have not been breached since May and March respectively.
However, if the DXY breaks through these resistance levels, it could propel the index to even higher levels, potentially hitting 112 points. Such a scenario could pressure BTC and disrupt its ongoing uptrend, especially in the absence of favorable conditions and a positive correlation between the two assets.
BTC’s loss of $26,000 on the daily chart. Source: BTCUSDT on TradingView.com
BTC’s loss of $26,000 on the daily chart. Source: BTCUSDT on TradingView.comBitcoin is trading at $25,900, down slightly by 0.7% in the last 24 hours. However, bitcoin bulls need to reclaim the $26,000 level to prevent a possible downside and further declines as the market nears the end of a new monthly close period.
Selected image from iStock, chart from TradingView.com
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