‘Crypto Winter’ May Worsen if Bitcoin Falls Below $20,000


Bitcoin, Ethereum Outlook:

  • Bitcoin prices and Ethereum edge slightly higher despite waning sentiment
  • USD strength supports USDC Stablecoin
  • Technical levels continue to provide support and resistance for price action

Recession Fears Remain a Key Catalyst for Risk Assets, Bitcoin and Ethereum Edge Slightly Higher

After posting its largest losing streak since 2014, Bitcoin is finally in the green, trading slightly above the $20,000 handle.

As the critical psychological level remains key for bulls and bears alike, a resurgence in recession fears and monetary policy have proven to be the key catalysts for Bitcoin, Ethereum and their alt-coins counterparts.

While Central Banks remain fixated on decade-high inflation, a brief recap of interest rate decisions that took place throughout the week include:

With the hawkish narrative weighing on sentiment, the massive sell-off in digital assets was further exacerbated by mounting insolvency risks for Celsius (a cryptocurrency loan company) as well as the decision to reduce the Coinbase workforce by 18%.

Bitcoin Key Technical Levels

After trading within a tight range, formed by key Fibonacci levels from the 2020 – 2021 move (purple) and the Dec 2020 – Jan 2021 move (blue), the release of the US CPI report last Friday enabled bears to gain traction, driving prices back towards the $20,000 handle, which continues to hold as critical support while volume remains high, suggesting that sellers continue to dominate price action, at least for now.

Bitcoin (BTC/USD) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

While prices continue to trade at an 18 month low, Bitcoin has shed over 70% of gains (YTD). For bulls to drive prices higher, a break of $22,000 and the $22,802 retracement could see a potential retest of $24,000.

However, if bearish momentum holds, a break of $20,000 could bring $18,000 into play, opening the door for the Dec 2020 low at $17,580.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707





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