24.08.202211:03 Forex Analysis & Reviews: Bitcoin rebounds from $21,000

Bitcoin managed to hold above the support level of $21,000 and rebounded slightly. As of August 24, the price reached $21,400 and continued to consolidate. At the same time, the Bitcoin network has not seen an increase in trading activity or an increase in the number of addresses. Considering this, we can assume that bears may try to retest the level of $21,000.

Bears managed to reach the important level of $21,000 and one more step closer to the retest of $20,000. During the last 5 days, the price has tested the level of $21,000 three times, which may indicate that it might break through this level soon. The technical indicators point to the high probability of a bearish breakdown of the level of $21,000. The stochastic oscillator completed a bearish crossover below 30 and the RSI is still declining below 40. Meanwhile, the MACD is declining in the red zone, indicating the emergence of a medium-term downtrend.

Despite clear factors pointing to further price declines, there is a possibility of an uptrend. It is based on the movement of the DXY index. The index reached the level of 109, but at the end of August 23, failed to break through that level and closed the day with a red candlestick. A failure of the DXY index could be a window of opportunity for Bitcoin, which got a chance to end the day with an uptrend. However, this probability is very low given the fact that the red candlestick on the DXY daily chart could not even overlap the previous bullish candlestick in volume, indicating a continued bullish sentiment for DXY.

Stock indices also continue to decline within a bearish trend. The S&P 500 index has reached the support area at $4,100, but technical indicators point to further downside. The stochastic oscillator and the RSI continue a strong downtrend peak and the MACD has formed a bearish crossover, indicating that a medium-term downtrend is forming. Given the SPX and DXY movements, Bitcoin should prepare for a drop below $21,000 in the near term.

Another important reason that could play both for and against Bitcoin is the Fed symposium. Market participants expect that Fed Chairman Jerome Powell will announce the key theses, which will allow to the markets draw certain conclusions about the future of the market and the Fed policy. Analysts forecast a negative outcome of the event and announcement of these may aggravate the current downturn in the markets. It is reported that Powell may confirm the Fed's desire to accelerate the reduction of balance sheets and further plans to raise the key rate.

Given the current situation, we should expect a decline in trading activity before Powell's speech on August 25-27. The general direction of the cryptocurrency market and investor sentiment suggests that Bitcoin and other crypto assets may decline in the coming days. It is impossible to predict the impact of Powell's rhetoric on the market but sharp price movements are likely to occur due to a significant increase in volatility. We will see by the end of the current trading week where the price may go.