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17.04.2023 11:46 AM
Bitcoin holds positions near $30k: Should a correction be expected?

Bitcoin ended the previous trading week near the $30k level. The asset was in a consolidation phase with trading volumes below the $20 billion level. Despite this, BTC confidently held above $29.5k, which may indicate the formation of volumes for the next upward spurt.

After three weeks, it's safe to say that Bitcoin has formed a strong support zone near the $28.5k level. Also, the asset worked through a broad resistance area, where active accumulation took place at the end of May 2022.

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However, the asset failed to reach the upper limit of the resistance area. Given the consolidation of BTC within the difficult level, we should expect further upward movement to finally work out this range and collect the final cascade of liquidity above $32.5k.

Bitcoin and the fundamental background

The last week passed for the financial markets under the sign of intensifying deflationary movement. Investment activity against the backdrop of such news significantly increased, but statements from the Fed cooled the market players' enthusiasm.

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As a result, BBG reports that markets are pricing in a 90% probability of a 0.25% key rate hike by the end of May. With the Fed halting/suspending its stimulus program for the banking system, a rate hike could be painful for the crypto market and the fund.

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The stock market continues to maintain a correlation with cryptocurrencies through similar patterns of movement of BTC and SPX. At the same time, the crypto market is doing much better, as BoFA said that investors should stay away from stocks, since the U.S. economy is expecting a recession in the next 12 months.

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Swiss bank Credit Suisse also said it estimates the probability of a U.S. recession over the next 12 months at 80%. Also, do not forget about the upcoming reporting season, which promises to be pessimistic.

Bitcoin finds itself

Despite the stock market's co-dependence on cryptocurrencies, Bitcoin and other coins are perceived as a profitable form of investment. Santiment notes that investor interest in the altcoin market has significantly increased after ETH reached the $2,000 mark.

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At the same time, Glassnode points out that the illiquid supply of BTC has reached an 8-year record level – 78%. This is a bullish signal, indicating the desire of long-term investors to continue accumulating BTC coins. Analysts confirm that recently, BTC's growth depends on the increase in stablecoin volumes in the market.

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And here we come to a signal that may indicate the beginning of a correction in the crypto market. The key stablecoin in the market continues to be USDT. The price of BTC rose parallel to Tether's inflow of stablecoins into the market.

However, last week we saw USDT break the support level. At the same time, BTC updated its high at $30k, but unlike the cryptocurrency, the dominance of the stablecoin continues to decline. This may indicate a gradual exhaustion of Bitcoin's upward potential.

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Despite this probability, Bitcoin has every chance to continue its upward movement to the $31.2k level, where the local fibo level of 1.618 passes. At the same time, technical metrics on the daily chart indicate a downward movement, but the situation may change with the opening of U.S. markets.

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Also, BTC needs to continue its upward movement to the $32.5k level, where the final accumulation line from May 2022 passes. Also, certain volumes have appeared at this level over the past few weeks. However, it is too early to talk about a breakdown of $32.5k, since the asset did not reach the $31.2k level.

Results

Bitcoin is approaching the completion of the local stage of the upward movement, which will be followed by a corrective movement. Certain fundamental prerequisites, as well as the passivity of long-term holders point to a high probability of such a scenario. However, before that, a final bullish chord to the $31.2k and $32.5k levels awaits us.

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