Bitcoin poised to test $38K support as macro headwinds intensify
Patience is a rare commoodity in the cryptocurrency space. It was only two weeks ago that Bitcoin rallied 15%+ to make the jump from $37,000 to near $42,000, but traders and retail investors soon became angsty at the rangebound motion of the world’s biggest cryptocurrency in the fortnight since.
“Do something!” was the prevailing sentiment across the Internet, as multiple rejections have occurred at the $43,000 resistance level over the last two weeks. But be careful what you wish for, as the yesterday’s latest pullback puts Bitcoin in position to go the other way, potentially testing the $38,000 support level.
Trading View (via Binance)
Of course, markets are largely in wait-and-see mode as the political climate is delicately poised across the globe. More specifically, Putin is playing the world’s most dangerous game of chicken at the Ukrainian border, with markets accordingly keeping a keen eye on developments in Eastern Europe. Crypto isn’t the only stakeholder, with the S&P 500 closing down over 2% yesterday as the doomsday scenario seemingly became significantly more likely. Bitcoin plummeted from near $44,000 to where it currently sits, just north of $40,000.
As if a potential World War III is not ghastly enough, the most feared two words in any investor’s lexicon have been getting a lot of airtime recently: rate hikes. Following January’s blowout inflation numbers, the highest since 1982, the market is now pricing in seven hikes in 2022. In other words, it’s last call at the bar and the lights are on – the party, hosted so graciously over the last couple of years by the Fed, looks like it’s about to end.
One of the prime narratives pushing crypto’s surge has been that of the inflation hedge angle; a way to escape debasing fiat currency resulting from the aggressive money printing. With the Fed now indicating this hawkish turn, the inflation push factor is coming undone. Combining this bearish development with the politics in Europe, the notoriously volatile Bitcoin is a nervous place to be.
Warren Buffet famously said “be fearful when others are greedy and be greedy when others are fearful”. Well, people are certainly fearful at the moment, and with Bitcoin one more red candle away from testing $38,000 resistance, it’s making an interesting close to the week. That $43,000 resistance looks a hell of a long way off right now.
We all know, however, that one comment from Putin, either one way or the other, could render all this moot. Against that backdrop, it’s not surprising to see Bitcoin range between that $38,000 – $43,000 space… for now.