As the U.S. Consumer Price Index exceeds all expectations, crypto markets are reexamining critical support areas. It is used by the U.S. to determine inflation. recordedAn 8.6% year-over-year increase (YoY) was the largest since 1981.
Related Reading| TA: Bitcoin Bears Keep Pushing, Why BTC Could Still Nosedive
The U.S. Federal Reserve could become more aggressive in trying to curb inflation. In response to this, the financial institution tightened its monetary policy, which led to a drop in global liquidity. This has also resulted into negative performances for risk-on assets such as Bitcoin.
Bitcoin’s price is now at $29,400. There has been a loss of 3% and 3.5% in the past 24-hours and seven days, respectively. The currency tried several times to return to the previous highs but market conditions contributed to an increase of selling pressure.
A pseudonym trader presentedTwo possible scenarios could emerge for Bitcoin over the next months. A trader claimed that the market has two possible targets for bitcoin’s price in the coming months: more volatility at $20,000, or an increase to $45,000
This trader thinks Bitcoin may drop as low as $25,000 and then return to the current level. In this scenario, Bitcoin could form a new range that is between its lows each year and lows of $30,000.
Some relief might come from the top cryptocurrency and crypto market cap later this year. But, rising inflation and a hawkish FED have cast long shadows over bulls.
This second scenario envisions a higher BTC price, with lower volatility. These potential scenarios were described by the trader as:
These scenario’s would make for a painful and slow crab market throughout the summer. This would make the space feel dead and unfulfilled. The right time is now for positive changes to the macro landscape that could lead to a bullish catalyst.
Are Bitcoin and Crypto able to reach new heights in 2022?
The U.S FED will tighten its belt as inflation spirals out of control in the United States by reducing balance sheets and raising interest rates.
This could lead to greater losses for the cryptocurrency market. As macroeconomic uncertainties rise, Bitcoin dominance has been on the rise in recent months.
NewsBTC stated that the metric was above 40% over the previous 7 days but may return to its 2020 level. Bitcoin alone was responsible for over 60% of crypto market capitalization.
Bitcoin and the cryptocurrency market might see relief if the economic narrative shifts its focus from decreasing inflation to ending a possible global recession. The scenario is likely to unfold by the end.
Related Reading| TA: Ethereum Holds Key Support, Why ETH Must Clear This Hurdle
New highs for crypto markets are unlikely in any event. Participants in the market should be alert for shifts of narratives, as these could signify potential bullish momentum.