Bitcoin has taken another hit. The first cryptocurrency by market cap lost support in the high area around $30,000 and currently struggles to maintain the mid area. At the time of writing, BTC trades at $36,120 with losses across the board.
Bitcoin has negatively reacted to the announcements made by Jerome Powell, Chairman of the U.S. Federal Reserve, in the FOMC meeting. A major macro event in the past week, the US dollar spike as investors lower their inflation expectations for the coming months.
In turn, commodities, such as Gold and Silver, were also affected. In the XAU/USD trading pair, the precious metal dropped from the high $1,800 area. Now, it trades at $1,763 with the XAG/USD trading pair showing similar losses.
However, there is some hope for the bulls. As economist Alex Krüger said via his Twitter account, Jerome Powell is known to caused movements in the markets that counterbalance each other:
Look at the bright side. Powell has a tendency to crash markets at the FOMC and pump markets at testimonies before congress. He will be testifying before congress on Tuesday.
Analyst from Jarvis Labs, Ben Lilly, expects the FED to make a move during the coming weeks to inject dollars into the markets. Thus, the dollar could weaken and allow Bitcoin some respite. The analyst said:
The US government likely doesn’t want a strong dollar when unemployment is higher than it wants. That’s because a cheaper dollar helps create more exports and job growth. So some type of policy push can almost be anticipated in the coming week or two if this continues.
Was $65,000 The Top, Is Bitcoin Bottom In?
Two of the most asked questions in every platform, social media, and chat related to cryptocurrencies. May and June’s price action has only made the bear sentiment in the crypto market stronger.
Trader Josh Rager brought back an “unpopular opinion” from 2020. At that time, he stated that the BTC peak for this current cycle might be lower than most expected. Predictions estimated that Bitcoin’s price could go as high as $100,000 or even $1 million, Rager thought that $78,000 and $85,000 were better estimates.
It’s hard to rule out a run like 2013 where price ended up hitting a new peak high 8 months later after a steep pullback. But for ROI from, cycle bottom to top, to reduce each cycle- why would this be any different? People think $65k isn’t high enough but history says otherwise.
On the other hand, former Goldman Sachs fund manager Raoul Pal believes the US dollar could only get stronger in the short term. Due to the slowdown in the global economy, the Covid-19 pandemic, and the lockdown measures, many placed bets for a weaker dollar in 2020, Pal said.
As the opposite seems to be happening, the FX market could be shaken out. In the short term, this could continue to affect Bitcoin and the crypto market. Despite this potential play, Pal is still long crypto.
This chart of the Euro is a potentially very large head and shoulders top. Remember – 100% of all FX Wall Street forecasters predicted a weaker dollar in 2021 and positions reached record short levels in the dollar. IF this breaks, a new macro regime is in play.
There seem to be too many unknowns and uncertainty in BTC’s price and the overall market. The mid-zone at current levels should operate as critical support. If the downtrend continues, many expect a return to the $20,000 area. The bulls must make a push to $40,000, only time will tell if they will receive a boost from Powell and the Federal Reserve.