Be ready for Bitcoin to end consolidation with a drop

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Bitcoin fluctuations continue to shrink, meaning spring is compressed further. The lower end of the trading range has moved to $ 29K, from where the BTCUSD has received support since the start of active trading in New York City. The upper limit of the formed triangle moved to $ 30.5K against current prices at $ 30.0K, reflecting a 1.8% gain over the past 24 hours.

Ethereum has added 0.3% in the past 24 hours, with other highs in the top 10 from a 2.9% decline (Avalanche) to a 1.0% increase (BNB), but all are doing worse than the crypto flagship.

The total capitalization of currencies, according to CoinMarketCap, rose 1.1% to $ 1.28 trillion, with the Bitcoin Dominance Index up 0.4% to 44.7%. The Cryptocurrency Fear and Greed Index declined 1 point to 11 on Wednesday and remains in “extreme fear”.

The bitcoin price is in a consolidation mode, equally dangerous for both bulls and bears. Both gain liquidity over time and get used to current prices.

On the market cycle side, the chances are higher that the current consolidation will culminate in a breach of the lower limit and a liquidation of stop orders, strengthening the initial downward momentum.

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Behind the pessimistic outlook is a tightening of monetary policy with slow economic growth that puts retail investors in the way of withdrawing capital from cryptocurrency in favor of consumption. It doesn’t help that expectations to get rich quick with cryptocurrencies don’t pay off, as bitcoin is worth as much now as it was in early 2021.

Investing in the industry is becoming more professional, going beyond naive attempts to buy and hold. According to CoinShares, investors withdraw money from bitcoin and invest in blockchains that support smart contracts, such as Cardano and Polkadot. Net capital outflows from cryptocurrencies last week amounted to $ 141m.

The ECB has warned that the high correlation between cryptocurrency and stock markets is usually seen in times of dire economic conditions and will no longer allow for the diversification of investment portfolios with digital assets.

This article was written by FxProAlex Kuptsikevich’s Chief Market Analyst.

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