Macro negative factors continue to ferment, and Bitcoin may weaken in the short term and test $26,000.

Bitcoin might weaken in the short term due to macro negative factors, testing $26,000.

After nearly half a month of sluggish consolidation, the cryptocurrency market further retreated due to the impact of UK inflation data, the latest Federal Open Market Committee (FOMC) meeting minutes, and the latest warning from US Treasury Secretary Yellen on the US debt ceiling deadlock. According to data from Blocking Terminal, as of press time, the Bitcoin trading price has fallen below $26,400, a decrease of about 3% in the past 24 hours, approaching the lowest level since May 12.

Macro uncertainty on multiple fronts

Earlier on Wednesday, the UK’s latest April Consumer Price Index (CPI) rose to 6.8%, higher than the expected 6.2%, reaching the highest level since 1992, causing the cryptocurrency market to plummet. The disappointing CPI means that the Bank of England will have to continue its recent interest rate policy, which usually hits the cryptocurrency market.

The latest Federal Open Market Committee (FOMC) meeting minutes showed that Federal Reserve officials have divergent opinions on continuing interest rate hikes, which is of no help in boosting market confidence.

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On Wednesday, US House Speaker Kevin McCarthy said that debt ceiling negotiations are still unresolved, eight days away from the US facing default risk. He also said he believed the negotiating team could make progress on Wednesday.

Since early May, the market has been weighing the US government debt ceiling negotiations and continued cryptocurrency regulation and macroeconomic uncertainty. BTC has been struggling in low trading volume and fluctuations, with trading prices remaining in the range of $26,500 to $27,500.

Ruslan Lienkha, market director of fintech platform YouHodler, wrote in his blog post that the “increased tension in the financial markets” has had an impact on stocks and digital assets.

Lienkha wrote: “As concerns about a possible US default intensify, US stock indices are under selling pressure: with less than 10 days to go before the authorities reach some kind of agreement, we have not seen any progress in these negotiations. All of this uncertainty is forcing financial institutions to restructure assets and prepare for potential defaults, adding additional pressure to market participants.”

According to David Wells, CEO of Enclave Markets, the trend in the cryptocurrency market follows that of the US stock market. “Although cryptocurrencies are a global market, trading volume often rebounds significantly during US trading hours, so sometimes big crypto fluctuations occur after macro-driven major stock fluctuations,” he told CNBC.

Some analysts believe that even if the US government can raise the debt ceiling before the June 1 deadline, risk assets such as stocks and cryptocurrencies may still be affected because the issuance of new US Treasuries will drain market liquidity.

For example, this week, the US currency market fund assets hit a new record of $5.8 trillion, according to Reuters, as investors turned their attention to short-term debt securities. Fixed-income mutual funds are the primary source of corporate and municipal funds, which have seen net inflows of $615 billion so far this year.

Deribit: Implied trading volume still at its lowest level

Deribit’s Chief Business Officer Luuk Strijers tweeted that $3.6 billion worth of bitcoin and ether options contracts will expire on Deribit this Friday, but the impact may be minimal as the market is currently at one of the lowest volatility levels of the year.

Strijers said the put option ratio was 0.38, and the unfinished call options may be more than two and a half times more than the put options. The amount of options to expire is considerable, but that doesn’t mean there’s reason to panic in the market.

“Implied trading volume is still at its lowest level, with the DVOL (Deribit Bitcoin Volatility Index) for bitcoin and ether at 50, and short-term trading volumes even lower, but slightly up, at the same level as bitcoin and ether, which is rare in history. We saw similar situations of minimum implied volatility (IV) in January of this year, followed by a sharp rise,” he said.

BTC 24-hour price chart suggests a downward trend

The 24-hour price chart tracked by cryptocurrency analyst Ann Mugoiri shows that the bearish momentum is increasing and the price of bitcoin is steadily declining. The bears have successfully controlled the market, pushing BTC/USD down to a low of $26,106.

In addition, the relative strength index (RSI) value of BTC is 37.79 and recently fell below its signal line, indicating that BTC is currently in a bearish market. For investors looking to take advantage of the current market conditions, this is a potential opportunity for profit. The Bollinger Bands are also narrowing, indicating that volatility is decreasing and consolidating within a certain range. The upper band of the Bollinger Bands is at the key level of $28,886, and the lower band is at $25,908. The moving average (MA) indicator also shows a bearish sentiment, as the 50-day moving average has crossed below the 100-day moving average.

The 24-hour Bitcoin price analysis chart shows that Bitcoin is in a strong downward trend, with bears dominating the market. BTC/USD has formed a series of lower highs and lower lows, indicating that selling pressure is intensifying. Ann Mugoiri believes that if it further falls, it may test the level of $26,000, and the market continues to be controlled by bears, and any signs of recovery still have a long way to go.

Author: BlockingBitpushNews Mary Liu

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