Bitcoin drops below $23,000. What’s next?
Rising inflation and interest rate hikes weigh Bitcoin down. A drop to $21,000 is a possibility based on the technicals.
Disclaimer: This page is not financial advice or an endorsement of digital assets, providers or services. Digital assets are volatile and risky, and past performance is no guarantee of future results. Potential regulations or policies can affect their availability and services provided. Talk with a financial professional before making a decision. Finder or the author may own cryptocurrency discussed on this page.
Bitcoin dropped below $23,000 as a rough weekend following Friday’s inflation report, which came with higher-than-expected numbers. At the time of publication, BTC is trading near $22,700.
This could be a decent entry point if you’re long-term bullish on the price. However, we may see further weakness before things start to improve.
Technical analysis shows further downside
After taking out two major support zones this year — $40,000 and $30,000 — BTC may be headed toward $20,000 in the weeks to come.
The daily BTC chart made a falling wedge pattern, a bullish pattern where the chances are higher of a break on the upside. However, this didn’t materialize and the price pushed lower.
This opens the way to $21,000 where the monthly 50-day moving average stands. This is the next support zone to keep an eye on below $25,000. A break of this price means we’ll see BTC at $20,000 very soon.
Source: StockCharts.com
Fundamentals still weigh down the price
Rising interest rates and tightening monetary policy are the factors that can weigh down riskier assets the most. The reason behind this is that borrowing money to invest in riskier assets becomes more expensive. Borrowing costs will likely stay this way throughout the year and into 2023.
Until inflation numbers go down and the Fed stops tightening the monetary policy, Bitcoin will face downward pressure. In the best-case scenario, BTC will move sideways.
Bitcoin is heavily oversold
Bitcoin is now technically oversold. This means we could see a relief rally, combined with covering short positions, once we hit the range between $20,000 and $21,000. The rally could move the price back to $30,000.
Long-term Bitcoin bulls may see this as a buying opportunity. Those who are more conservative may want to wait a while for things to stabilize.
Binance freezes Bitcoin transactions
Also Monday, Binance — the world’s largest crypto exchange judged by volume — placed a temporary hold on Bitcoin transactions.
A tweet from the company blamed a “stuck” transaction for a backlog, and said it was working on a fix.
Update: Binance said the problem was resolved and trading restored about 11:30 am ET.
Trying to get a handle on the markets? Explore strategies for how to trade crypto or see if there's a better platform for you with our guide to the best crypto exchanges.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
Kliment Dukovski owns cryptocurrencies as of the publishing date.
