- Bitcoin begins the new week in a price range that disappoints traders and gives little room for speculation.
- When compared to equities, Bitcoin has outperformed them since the U.S. regional bank run, despite the fact that its price normally correlates with the macro markets.
- Gold, originally regarded as the safest asset class, fell from $2,050 on May 4 to $1,960.
- The price of Ethereum has been fluctuating recently between $1,800-$1850.
- The Personal Consumption Expenditures (PCE) Index, along with a plethora of other economic data points, are expected to raise macro triggers this week.
The tight trading range of Bitcoin shows that market participants have no choice but to wait for a trigger to initiate the next trending move. For the previous several days, Bitcoin has been trading in a constrained range. Tight ranges are often followed by a range expansion, which produces powerful trending movements. The seven-day range of the price of bitcoin is similar to January 2023 and July 2020, both of which preceded significant market movements.
Not only Bitcoin is at a crucial phase; so is the S&P 500 Index (SPX). The SPX has come very close to a strong barrier after its 1.65% increase last week. Before trying to initiate a trending move, market players will be closely monitoring the result of the debt ceilings discussions. For many days, the US Dollar Index (DXY) has been trading in a narrow range between 100.80 and 105.80. Traders in a range often bought around the support and sell near the resistance.
Bitcoin’s Liquidity and Volatility:
Bitcoin’s volatility, however, has decreased significantly since the beginning of the year, according to data from CoinGlass. As hodlers continue to be walled and fresh liquidity is not coming, the price of bitcoin has stabilised within a constrained range. Although Bitcoin is normally a very volatile asset, there has been weekly stabilisation of its prices in the 3% to 5% region. Others believe that volatility will increase. Despite the confidence of long-term hodlers and the slow trickle of fresh cash entering the market, Bitcoin has nevertheless beaten many other assets in 2023.
In realised terms, bitcoin price liquidity remains cyclically low. This might be because many investors have reached their breakeven point around the current Bitcoin price. Despite an increase in transactions as a result of text-based ordinals, Bitcoin volume remains low. The absence of liquidity intensifies Bitcoin investors’ accumulation strategy, even when returns are unrealized, indicating a solidification of mood among long investors. Bitcoin on-chain transfer volumes have remained around $4 billion, much below the all-time high of more than $13 billion. The Personal Consumption Expenditures (PCE) Index, along with a plethora of other economic data points, are expected to raise macro triggers this week.
Bitcoin Price Analysis:
The bears effectively defended the resistance region at $27,812, but they were unable to lower the price below the critical support level of $25,450. This indicates that bulls are buying on modest dips. As long as the price remains above the current support of $26,550, the bulls will press on to the resistance region around $28,144. If they are successful, it will indicate that the markets have rejected the lower levels.
This might raise the chances of a rally to the $28,800 resistance area. This level may once again prove to be a significant challenge for the bulls.
Contrary to the above bullish thesis, if the price goes down and breaks below $27,812 again, it will show that supply is higher than demand. Then, the BTC/USDT pair could fall to a crucial level between $25,450 and $24,719. This week, the number of macro events will go up a little bit. On May 26, an array of economic data will be released, including the Personal Consumption Expenditures (PCE) Index. This is a key part of how the Fed sets interest rates, and its conclusions may drastically alter how the market thinks rates will change
Concluding Thoughts:
For the past six weeks, the prices of cryptocurrencies have been pushed down by a gloomy market structure. This has caused the total market value to drop to $1.1 trillion, its lowest level in two months. Also, there will soon be a fight over the U.S. debt limit, because the U.S. Treasury is running out of money fast.
Even if most investors think that the Biden administration will be able to reach a deal before the real default of its debt, no one can say for sure that the government won’t shut down and then fail. Even gold, which was once thought to be the best asset class in the world, hasn’t been able to avoid the recent drop. The price of gold has gone down from $2,050 on May 4 to its current level of $1,960. On the other hand, given how uncertain the financial situation is, there doesn’t seem to be any reason for the bulls to bet on a quick comeback of the crypto market. But because of the even demand on futures markets, traders don’t seem to want to make more bets until the U.S. debt standoff is more clear.
Liquidity can be taken from above and below, but so far, there has only been a hint of a liquidity sweep. Some economic shocks could happen in the next few days, but it will take a big change in the data to crack Bitcoin. The U.S. Treasury Department has warned that on June 1, the federal government might not be able to pay its debts. That date is less than two weeks away.
