Bitcoin price continued its bearish momentum this week as investors focused on the extremely hawkish sentiment by the Federal Reserve. BTC dropped to a low of $18,515 on Wednesday, which was slightly above this year’s low of $17,708. It has fallen by more than 57% this year alone.
Bitcoin crash explained
Bitcoin has been in a strong bearish trend in the past few months as demand for the coin eased. Financial results by companies like Robinhood, Coinbase, and Cash App’s Block showed that the number of people buying Bitcoin and other cryptocurrencies has been in a downward trend. The same is true for people trading BTC in decentralized exchanges like dYdX and Uniswap.
Inflation has also surged in the past few months. Recent data from countries like the US, the UK, and those in the European Union showed that inflation jumped to the highest level in decades. As a result, central banks have been forced to intervene by hiking interest rates at the fastest pace in more than a decade.
In the United States, the Fed has hiked by 225 basis points this year. Analysts expect that it will hike by 75 basis points on Wednesday. It will then point towards more 0.50% rate hikes for the remaining part of the year.
As a result, Bitcoin and other cryptocurrencies have tumbled, bringing the total market cap of all digital coins tracked by CoinMarketCap below $1 trillion.
Other financial assets have been under pressure as well. For example, American stocks have had their worst performance this year, with the main indices falling by more than 15%. Bond prices have all slipped, pushing their yields to the highest level in years. Commodities like gold, copper, and crude oil have also dropped.
Therefore, fundamentally, the best time to buy Bitcoin will be when the Fed changes its tune on interest rates.
Bitcoin price prediction
The daily chart shows that the BTC price has been in a steep downward trend in the past few months. Subsequently, the coin has managed to move below the short and longer-term moving averages.
A closer look shows that the coin has formed what looks like a double-bottom pattern at $17,708. Historically, a double-bottom is usually a bullish sign. Therefore, a drop below this pattern will invalidate the bullish pattern.
As such, from a technical perspective, the right time to buy BTC will be when it moves above the key resistance at $25,206. This is an important level since it is the neckline of the double-bottom pattern.