A new correction has begun, but is it a correction?
Bitcoin has started to decline steadily during the last few weeks. This is not a collapse, as the digital asset likes to do, but it is a steady drop in its quotes. The chart below clearly shows that Bitcoin's upward trend is maintained due to the ascending trend line. It lies approximately around the 61.8% Fibonacci level of $ 51,350. The Senkou Span B line is located slightly higher. Together, these two obstacles can provide serious support for Bitcoin. But at the same time, as usual, everything will depend on the mood of most major traders. So far, we expect that Bitcoin will drop by another 3-5 thousand dollars.
The factors of Bitcoin's decline can be banal to the point of horror.
The fundamental background for Bitcoin remains fairly neutral. After all, even if there is no important and high-profile news, market participants can still continue to invest in cryptocurrency. According to the latest data, about 22% of the adult population of the United States already owns Bitcoin or other cryptocurrencies. Therefore, whether we like it or not, this cryptocurrency is becoming more and more popular all over the world. Another thing is that it is still extremely rarely used for settlements or payments. It is still a highly profitable and high-risk instrument. Therefore, most of the news related to Bitcoin pursues only one goal – to create as much hype as possible and make it more expensive even more.
For example, the authorities of El Salvador decided to create the world's first "Bitcoin-city", whose residents will be completely exempt from taxes and decided to attract a billion dollars for this project by issuing bonds. In fact, the project is very interesting, but now, it is vital for the whole country that Bitcoin grows in price. Naturally, as in the case of large investors, forecasts from El Salvador about the future price of Bitcoin will come only optimistic. It can be recalled that for most of 2021, many experts were talking about Bitcoin at $ 100,000 per coin by the end of the year. There were forecasts of $400,000 next year. However, it shows that they are not destined to come true yet. Although Bitcoin has updated its annual and absolute highs, it is not much, and now, it is "aiming" at a new "bearish" trend.
Moreover, there is a "bubble" problem for the cryptocurrency market as well. It should be remembered that the entire last "bullish" trend occurred at a time when the Fed was pumping the economy with free money. In this case, this growth is "inflationary", simply due to the fact that there was more money in the economy, which means random. Now that the Fed has embarked on the path of tightening monetary policy, an outflow of capital may begin from the cryptocurrency market, which will lead to a serious drop in BTC.
The upward trend remains on the daily timeframe. If Bitcoin manages to rebound from the Senkou Span B line or trend line, then the current trend will continue, and the cryptocurrency will be able to count on a new round of growth and update its absolute highs. However, we believe that this is the beginning of the end. The breakdown of the trend line can create a strong signal to change the trend to a downward one.The material has been provided by InstaForex Company - www.instaforex.com