Bitcoin is not showing strength over the past week. It remains vulnerable to retracing prior lows. It seems that the benchmark cryptocurrency is negatively responding to current macro-environments and a general weakness on the part of the buyers.
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Bitcoin’s price is currently at $38,544. There has been a loss of 1.2% in 24 hours, and an adjustment of 10.8% over the past week.
As NewsBTC reported yesterday, Bitcoin has been in an “equilibriums” with speculator dumping their coins for a loss as bulls attempt to create a floor. This status quo has existed since Q4, 2021, leading to BTC’s price moving sideways for months.
Despite being constant, the market’s current state is unstable and could move in either direction. However, the downside appears likely. BTC has failed to break below $40,000.
Material Indicators data continues to show a significant stack of orders for bids at $36,000 and $35,000. Additionally, BTC recently climbed to $40,000 and sellers have responded quickly, which may indicate that they are trying to suppress the price.
Low demand and this combination suggest that there may be an active effort by entities to make their pockets fuller at lower levels. The theory may be invalidated if the mid-range is around $40,000 again.
Arcane Research recently highlighted two macro events that could cause volatility in Bitcoin and the cryptocurrency market. The U.S. will publish a February CPI report on Thursday. It is anticipated that it will continue its upward trend and reach 7.9%.
There is uncertainty about how the U.S. Federal Reserve will respond to rising inflation due to the Russia-Ukraine war. At this moment, markets are predicting that the Federal Reserve will react to higher inflation to their disadvantage for assets such as Bitcoin.
Inflation, war, and an unpleasant week for crypto investors
A rise in commodities seems to support the previous thesis. After the Russian invasion, Gold’s price (XAU), has seen a rebound. Precious metals trade at a high of nearly $2,000 after the introduction of COVID-19 lockdown measures.
Bitcoin experienced a decline during that time, just as Gold started its rally. BTC and ETH have also seen an increase in demand, as has XRP, ADA and other large-cap cryptocurrencies. Arcane Research noted:
Further, the war in Ukraine has huge implications on the commodity markets leading wheat, oil, gas, and nickel to soar – this may complicate central banks’ effort to combat inflation. Surging commodity prices could have spillover effects. We already observe odd signs in Egypt and Poland.
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It is possible for central banks to adopt more aggressive and faster monetary policies if they consider inflation, especially the U.S. FED to, to be more of a persistent problem than initially believed. For a crypto market already in a weak state, a FED that is hawkish could make matters worse.