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Will Bitcoin’s break through its long-term resistance line be enough to start a new trend?

آیا عبور بیت کوین از خط مقاومت بلندمدت خود برای شروع روند جدید کافی خواهد بود؟

Bitcoin price crossing the long-term bearish resistance line in the last two days has given some traders hope for the start of a new uptrend. But have other market indicators and macroeconomic factors changed enough to encourage buyers to support this new trend?

To Report Cointelegraph, the price of Bitcoin yesterday (October 13) crossed a long-term downward trend line and once again reached above the $20,000 range. This is the resistance line that Bitcoin has been trying to cross since November 15 last year (November 24).

In fact, the continuation of the sideways trading trend allowed the price of Bitcoin to simply stabilize above this long-term resistance line; A range that fluctuated between $18,500 and $24,500 in the last 114 days.

Bitcoin long-term downtrend line on daily Bitcoin/USD price chart
Bitcoin long-term downtrend line on daily Bitcoin/USD price chart

Since the price of Bitcoin and Ethereum tend to move in line with stock market prices, when the S&P 500 and Nasdaq indices ended the day on October 4 (12 Mehr) with a 2-3% increase, the price of Bitcoin also reached $20,365.

Bitcoin, Ethereum and S&P 500 price correlation chart
Bitcoin, Ethereum and S&P 500 price correlation chart

However, don’t forget that short-term price patterns do not necessarily indicate a larger trend change. Kevin Metrix says about this:

The correlation between Bitcoin and Ethereum with the S&P 500 has increased recently, as the benchmark index has dropped to 3,600; where it was previously reached in December 2020.

In contrast to the rise in the stock market and digital currencies on October 4, fears of global skyrocketing inflation, rising interest rates and other economic concerns continue to suppress investors’ appetite to engage with the markets. This fact is clearly reflected in the performance of these markets in the third quarter of this year.

Will Bitcoin's break through its long-term resistance line be enough to start a new trend?
Performance of Bitcoin and other assets in the third quarter of 2022

OPEC announced on October 5 (October 13) that it plans to reduce its oil production by 2 million barrels per day; This amount is equivalent to 2% of the global demand for oil. Although oil stocks rallied after the news, the White House is concerned that lower oil production will push up fuel prices and complicate the Fed’s fight against inflation.

In general, institutional investors such as Citi and Goldman Sachs expect the volatility of the stock markets to continue, and for this reason, they have considered the price of the SNDP 500 to be bearish in revising their end-of-year targets. Meanwhile, other investors also predict the year 2023 to be bearish.

On top of all that, inflation remains high around the world, corporate earnings forecasts are bearish, and the Federal Reserve appears determined to deflate with confidence in its current plans.

As a result, none of these developments will increase the risk-taking of traders to invest in the market. In addition, considering the correlation between Bitcoin and stock markets and the sensitivity of investors to bearish financial news, it seems unlikely that Bitcoin crossing this long-term downward trend line is a sign of a change in trend.

In fact, breaking the range and closing a sequence of daily candles above $25,000 would be a more plausible sign for the start of a new Bitcoin price trend.

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