Bitcoin price analysis (21-27 June): a bounce off $31,000 is likely
Bitcoin could witness a bounce next week as the bulls defend the $31,000 support.
At its latest meeting on 16 June, the US Federal Reserve raised the headline inflation expectations from its March projection of 2.4% to 3.4%. To keep inflation under control, Fed officials now anticipate two rate hikes in 2023, while earlier, in their March meeting, they had forecast no rate hikes at least until 2024.
St Louis Federal Reserve president James Bullard sounded even more hawkish in his appearance on CNBC, saying the first rate hike could happen in late-2022. These announcements have sent the US dollar soaring, with the DXY dollar index rising 2% last week.
The stronger dollar pulled gold futures down by 5.88% and the Dow Jones Industrial Average by 3.5%, its worst weekly loss since October. The widespread selling did not spare bitcoin as it was down 8.77% last week.
Another event that is causing nervousness among bulls is the death cross on bitcoin. A death cross is formed when the 50-day simple moving average (SMA) crosses below the 200-day SMA. This technical event signals a change in the long-term trend and tends to attract further selling.
However, it was not all gloom and doom for bitcoin. According to a CNBC report, Goldman Sachs has teamed up with crypto merchant bank Galaxy Digital to offer bitcoin futures trading for its clients. This may pave the way for other investment banks and institutions to follow Goldman’s lead and provide bitcoin exposure.
Can the possible arrival of additional institutional investors arrest the decline in bitcoin? What are the critical levels that will signal a further fall or the start of a sustained recovery? Read our bitcoin price trend analysis to find out.
Bitcoin price technical analysis: Weekly chart
Bitcoin’s price attempted a recovery but met with strong selling near the 20-week exponential moving average (EMA) last week. The 20-week EMA has started to turn down and the relative strength index (RSI) is in the negative zone, indicating advantage to the bears.
The sellers will now try to sink the price below the 50-week SMA. If they manage to do that, the BTC/USD pair could witness renewed selling and drop to $20,000. Such a sharp fall would further dampen sentiment and may considerably delay the start of the next uptrend.
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Alternatively, if the price rebounds off the 50-week SMA, it would indicate that traders are buying on dips. The pair could then remain range-bound between the moving averages for the next few weeks. A breakout and close above the 20-week EMA would suggest that correction has ended.
The bitcoin price weekly analysis shows the price is stuck between both moving averages. Let’s see if the BTC price analysis of the daily chart projects a directional move.
Bitcoin price technical analysis: Daily chart
Bitcoin’s price has been consolidating between $42,553.25 and $30,997.95 for the past few days. The pair turned down from $41,327.55 on 15 June and broke below the 20-day EMA on 18 June.
The bears will now try to sink the price below the support of the range while the bulls will attempt to defend the $30,997.95 level. If the bulls succeed, the pair may extend its stay inside the range for a few more days.
The bulls will have to drive and sustain the price above the 200-day SMA to signal the start of a possible new uptrend.
Alternatively, if the bears sink the price below $30,997.95, the pair could drop to the 19 May low at $28,639.70. A breakout below this support would be a huge negative.
How to trade bitcoin this week
If bitcoin rebounds off the $30,997.95 level with strength it will suggest that bulls are defending this price-point aggressively. That could offer a short-term trading opportunity to traders, with a possible bounce to $41,000. This positive view would be invalidated if the bears sink and sustain the price below $30,997.95.