The impact of the Federal Reserve policy and the higher time frame market structure in Bitcoin indicates that the BTC price is not yet ready for a trend reversal.
Bitcoin (BTC) price continues to slide below $22,000, and the broader narrative among traders and the mainstream media is that risk-off sentiment is a dominant perspective ahead of this week’s Jackson Hole summit.
During the three-day seminar, the Federal Reserve is expected to explain its view on inflation, interest rate hikes and the overall health of the US economy.
Meanwhile, Crypto Twitter traders continue to fantasize about a “Fed Pivot” where rate hikes will be scaled back below 0.25 basis points and some form of monetary easing re-emerges, but the possibility that the Fed will take a pacifist view. The short-term view seems unrealistic, given the central bank’s 2% inflation target.
Regarding the latest Bitcoin price movement, there is a saying among traders:
“The short-term trend faded in favor of the long-term trend.”
From a general standpoint, BTC price is clearly in a downtrend with a four-month long stretch of recurring bear flags still in progress.
Certainly, the on-chain data suggests that the price may be bottoming out.
Of course, the total volumes and some on-chain data looking at the BTC addresses of whales and shrimps may indicate a backlog.
Yes, open interest in BTC and Ether continues to reach record levels and this is adding fuel to the hard fork token narrative of ETH and Proof of Work ETH leading to a short squeeze on BTC and ETH.
Any of these things can happen, but beware the narrator of those hypnosis-filled dreams and remember that direction is always a good friend the merchant can count on.
Although it may seem unpleasant, the trend is going down. Bitcoin continues to encounter resistance at the long-term downtrend line and price fails to lock in resistance at major moving averages such as the 20, 50 and 200 day moving averages.
BTC/USDT daily chart. Source: Tradingview
Each drop in price simply creates a flag column, and the subsequent “consolidation” creates a flag of a continuation flag pattern. As the pink boxes on the daily chart show, BTC price is simply trading within a defined range before breaking apart below into the underlying liquidity shown in the visible range of the volume profile and liquidity charts.