long-term Bitcoin downtrend
Combined with increased sales pressure in the cryptocurrency market and a marked change in the state of some technical indicators, the long-term bullish outlook for Bitcoin is at risk of losing its credibility, an event that is largely influenced by macroeconomic factors.
Everything you need to know about Bitcoins
From Kevin's office, histogram, and MACD indicator, from a one-month point of view, the "Bitcoin/Dollar" market has just reached the mid-zero or zero level. Analysts see this as the downturn that could change the market from bullish to long-term deflationary.
In a recent research note, Katie Stockton, co-founder of Fairlead Strategies, wrote:
An unconfirmed sell signal is emerging in the McDee, which, if confirmed by a breakthrough the $37,400 support, increases the possibility of a bearish long-term outlook.
Bitcoin is currently trading at less than $37,400. Earlier in the month, it lost one of its major price staples. The Makedi histogram should remain in red (in negative territory) until the end of Monday to confirm this sell signal.
The last time McDee entered negative territory every month dates back to July 2018 (July 97). Bitcoin price in the ensuing months, it lost more than half of its value, dropping from a high of $20,000 to $3,500.
A technical indicator indicating the beginning of a long-term Bitcoin downtrend
Comparison of the current status of the McDee Index with 2018
Some experts believe that because moving averages indicate a delay, technical indicators such as Makdi Change, based on their volatility, and fundamental or macroeconomic factors are more reliable for price analysis. Unfortunately, fundamentals are now leading the way in lowering prices.
Rising bank interest rates and their impact on Bitcoin prices
The Bitcoin market is about to start its third consecutive month of decline, while traders fear that contractionary monetary policy is also increasing.
Bitcoin is currently trading at around $37,000, which indicates that the price has fallen by 20% since the beginning of January. As market data shows, bitcoin returns for November and December were negative 7% and negative 19%, respectively.
Noelle Acheson, an expert at Genesis Global Trading Group, recently wrote on her LinkedIn:
- The recent market reform has been affected by macroeconomic factors; more specifically, rising bank interest rates in America and the central bank's plans to slow down the printing and supply of dollars.
- The 60-day correlation between the bitcoin price and the S& P500 stock index was approximately 0% at the end of 2017. However, that number has now reached 65%.
- Last Wednesday, the US Federal Reserve's program to eliminate monetary stimuli related to the pandemic coronavirus was modified.
- Since then, a large number of banks on Wall Street, including Goldman Sachs, have predicted that the Federal Reserve will increase bank interest rates five times this year.
- The market also expects interest rates to rise by 0.25% each time. Rafael Bostic, chairman of the Atlanta Federal Reserve, said on Friday that the central bank could surprise everyone by raising interest rates by 0.5 percent in March.
- Speculation is now spreading that other central banks around the world may follow the Fed's policies, which could complicate matters for Bitcoin and other high-risk investment assets.
- With prices of goods and services rising around the world, central banks are likely to have good reason to raise bank interest rates and keep their currencies against the dollar.
- The appreciation of a country's currency in world markets has lowered the cost of imports and brought inflation under control.