The Bitcoin price has declined for the seventh week in a row. The so-called Fear & Greed Index has slipped into the extreme fear range. The BTC Coin is trading at $33,726 today, which is the lowest level since January 24th this year. It has crashed more than 51% from its all-time high.
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Investors are scared
The Bitcoin price continued its downward trend this week, partly because investors are worried about monetary policy tightening in the United States and other developed countries.
The sell-off in the crypto market reflects the fact that investors are afraid to invest in risky assets such as cryptocurrencies when money becomes tighter. Moreover, mid-year is historically a time when prices fall in the stock and crypto markets. That’s why there’s even a saying among professional traders to “Sell in May and go away.”
Last week, the Federal Reserve signaled that it is serious about its restrictive monetary policy. In a statement, the U.S. central bank announced that it would raise the key interest rate by 50 basis points for the first time in more than 20 years. At the same time, Fed Chairman Jerome Powell said that the bank will make further rate hikes of 0.50% in the coming meetings.
With this, the Fed is initiating its most aggressive policy in more than a decade. It had already raised the federal funds rate by 25 basis points this year. It has also committed to quantitative tightening.
This week will be important for the Bitcoin price from a monetary policy perspective. The US will release the latest consumer inflation data on Wednesday. Analysts expect these figures to show a drop in the headline inflation rate from 8.5% to 8.1%, and the core inflation rate is also expected to have fallen from 6.5% to 6.0%.
If the analysts are correct, it would mean that inflation may have peaked. That, in turn, could discourage the Fed from aggressive rate hikes. So now could be a good time to buy Bitcoin. In this article, we explain how.
Meanwhile, the Fear & Greed Index for Bitcoin has moved into the extreme fear range of 11. This is a sign that the sentiment has been very pessimistic in recent days.
Bitcoin Price Forecast
In the weekly chart, we can see that the Bitcoin price has been in a strong downtrend over the past few days. A closer look shows that the cryptocurrency has formed a double top with its “chin” at $28,813. In addition, the lines of the moving averages of the last 25 and 50 weeks have formed a bearish crossover pattern.
The Relative Strength Index (RSI) is also in a strong downtrend. Therefore, the BTC price is likely to fall further as the bears target the key support level at $28,813, which bottomed on June 28.
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First published in CRYPTO MONDAY, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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