Uncertainty reigns worldwide. Investors don’t know where to put their money for many reasons. So the question becomes: is now a good time to invest in bitcoin?
Would you like a little more clarity in uncertain times? You want to know how the crypto space is developing in the long and short term? Where is the price going? We have taken over and study all the important factors for you: ab Fundamentals to Fibonacci support – From block to chain.
Part 1 – Market Conditions, Part 2 – Technical Analysis
Bitcoin price is uncertain: what is happening in the world?
In the previous lines we have already mentioned the importance of the key interest rates of the American Fed and ECB. About 40 percent of all international transactions are in US dollars and 60 percent of all foreign exchange reserves are in US dollars. Therefore, it can also be argued that the monetary policy of the US Federal Reserve is more important than that of the European ones.
Why we want to reiterate this point: Two days ago, the Fed raised the world’s most important interest rate by 0.75 percent to 2.5 percent, thereby restricting the money supply again. According to Fed Chair Jerome Powell, the central bank will also decide to raise interest rates in the coming meetings.
Inflation, It is a worldwide phenomenon affecting all things at present. Where it is most noticeable to us citizens: in everyday consumer goods: rice, milk, eggs, etc. For this reason, the bank decided on radical measures and began gradually raising interest rates in the spring. Currently around 2.25 to 2.5 percent, it should rise to around 3 percent by the end of the year.
There are fears of a sharp slowdown in the economy and associated inflation. The question is, is Powell holding back the economy as a whole? And how does this affect the price of Bitcoin?
One indicator that US economic output will soon collapse if interest rates rise is GDP. In the USA it was already minus 1.6 percent in the first quarter of 2022 and by no means what American economists intended. The Fed has been arguing with a low unemployment rate since the beginning of the year, but knows the balancing act it has to master.
emergency braking is the word of the hour and means as much as Recession. Some people, like former US President Donald Trump, are already talking about depression.
If the Fed isn’t enough for you, you shouldn’t forget the ECB at the moment – after all, 20 percent of all international transactions are also processed with the euro. Surprisingly, ECB boss Lagarde and his colleagues were able to agree on an increase of 0.5 percent, although economists had previously expected a maximum of 0.25 percent. So add fuel to the fire.
How should Bitcoin fare well in such an environment?
Analysts claim that the price has bottomed and it could only go up sharply from here, but is that really the case? When does Deutsche Bank openly and honestly admit in its latest analysis that the German economy is headed for a recession? When even Goldman Sachs sees a 38 percent chance of a US recession in 2023?
When people spend 10% or more on consumer goods like groceries, they are reluctant to spend money on bitcoin and cryptocurrencies. It is true that we are still in the introductory phase and many banks are waiting to step in with huge amounts of money. But if people don’t have money for consumer goods, where do they get money for BTC?
Nonetheless, we remain bullish on the long-term price of all cryptocurrencies. In the short to medium term, however, we have many problems in the world that need to be solved first.
This is the best time to buy Bitcoin. We’ll probably never find it that cheap again.
And what does technical analysis say?
We asked our analyst Konstantin Kaiser whether we see a new bottom or are already on the bottom:
From a technical point of view, there is certainly still room for improvement.
However, if we look at extreme inflation as well as (and partially) extreme inflation, the BTC price drop beats almost every other asset. After all, the supply of BTC is limited, while its equivalent, fiat currency (EUR, USD), has skyrocketed. Investors should also keep in mind that the Fed printed more USD in one month of 2020 than it did two centuries ago.
Basically, my stance was and is that CHF and JPY are a conservative hedge against inflation. Japan does not seem to be recovering from the pandemic, which is why the JPY is falling significantly.
However, for great opportunities, I don’t see anything better than BTC, which is currently between $3,500 and $20,000. Although it’s hard for me to imagine Bitcoin staying below $10,000 for a long time. The buying interest of the rich is too great for anyone to pull off this deal.
In my opinion, any price close to $14,000 is an ideal entry point. However, no upside momentum has been confirmed so far. If August goes well, it could be just around the corner.
The price of bitcoin could be even lower
Bitcoin price chart from Tradingview
The end of the last three bear markets is indicated by the moving histogram of the MACD on the monthly chart. If we look at that on the monthly chart, I’m absolutely bullish. A potential bottom then forms, indicating another bull cycle.
It is also interesting that the previous bear market lasted between 274 and 426 (approx) days (approximately 355 days on average).
It is currently just below a 212-day high, so downside could still exist.
No confirmation of July bullish reversal
MACD Histogram monthly chart bitcoin price
For July, we certainly don’t have bullish confirmation yet from the moving histogram on the monthly chart. However, the faster bitcoin price closes this month, the more likely it is to confirm a bull run in August.
If we get confirmation of a bullish move in August, the $17,600 level could lead to a downside break.