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Over the past two weeks, an upward trend has been systematically building on Bitcoin and other cryptocurrencies. As a result, BTC and major assets gained a foothold above key resistance levels and were ready to move further up.
Macroeconomic factors contributed to the building of an upward trend in cryptocurrencies. The US dollar index was correcting, and the stock market was at the peak of a bullish period. At the same time, Fed members expressed the first hints of a slowdown in the rate hike.
Bitcoin successfully gained a foothold above $20k and continued its upward movement to the $20.7k–$21.1k area. The cryptocurrency successfully tested the upper limit of the resistance level, after which it rolled back for consolidation. Bullish signals on BTC were observed this week, which indicated the desire of investors to move to local highs.
However, all these achievements were lost when Bitcoin made a downward breakout of the $20k level. In just a day, BTC lost more than 5% of its value, and the market capitalization fell below $1 trillion. The volume of liquidated positions amounted to $330 million.
Following the fall, Bitcoin tested the support zone at $19.3k, followed by a response from buyers. Despite this, there were not enough absorbing volumes, and BTC remained trading below $20k. As of writing, the cryptocurrency is moving near $19.7k.
The technical metrics of the cryptocurrency indicate the preservation of the downward dynamics and the complete dominance of sellers. The RSI index and the stochastic oscillator are approaching the oversold zone, and the MACD risks forming a bearish crossover.
We are seeing an attempt by buyers to absorb the bearish volume and recover above $20k. The market lacks large buyers and a surge in on-chain activity. Presumably, the situation will change after the opening of US trading.
After the formation of an uncertain Doji candle, SPX went up and reached the $3,800 level. Technical metrics indicate the continuation of bullish dynamics: the RSI indicates growing consumer sentiment, and stochastic formed a bullish intersection. Given the upward mood of the funds, we can expect an increase in buying sentiment in the crypto market.
At the same time, the US dollar index demonstrated positive dynamics, which started the trading day with a buying breakthrough. DXY is trading near 110 but continues to experience increased selling pressure. Despite this, technical metrics point to a likely bullish price reversal.
There is no pronounced trend on the main Bitcoin trigger assets, which means that any scenario is likely. At the same time, SPX has great potential for an upward movement, while DXY is under pressure from sellers.
Among the probable reasons for the fall of Bitcoin is the battle of the mastodons of the crypto market. Binance and FTX exchanges are in a difficult relationship due to the statement of the CEO of Binance about the sale of FTX tokens. In the end, this may lead to the insolvency of the latter.
Many experts and influencers see today's fall in Bitcoin as a reaction to the conflict. Most likely, the friction of the major market players had an impact on BTC, but the trigger was an unsuccessful retest of the $21k level and further activation of sellers.
It is also important to note that despite the upward movement to $21k, Bitcoin on-chain activity has remained relatively high. Given this, it can be assumed that the BTC price movement was intended to harvest liquidity, which eventually succeeded.
The collapse of Bitcoin below $20k is an unplanned event that occurred due to a combination of factors and the activation of sellers. With that in mind, it's important to see a buyer's response, which would be incomplete without US investors.
If BTC manages to win back the $20k level at the end of the trading day, then the probability of further consolidation and a retest of $21k increases significantly. Otherwise, the cryptocurrency will resume fluctuations in the $19.3k–$19.8k range and increase the chances of a local bottom retest.
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