Bear market fractals, weak techniques and macro risks continue to point to more pain for Bitcoin, according to crypto analyst Yashu Gola. We have prepared Yashu Gola’s analysis based on metrics for our readers.
Bitcoin hash strips flashing alt signal
On the daily chart, BTC is down 1.72% to $21,022. It also fell about 14% on a weekly basis. Hence, it posted its worst weekly return since mid-August. However, some on-chain indicators suggest that Bitcoin’s correction phase may be coming to an end.
This includes Hash Ribbons, a metric that monitors Bitcoin’s hash rate to determine whether miners are in accumulation or capitulation mode. As of August 20, it marks the end of the surrender of metric miners for the first time since August 2021. This, in turn, is likely to cause the price momentum to change from negative to positive.
Bitcoin Hash Ribbons / Source: GlassnodeHowever, Bitcoin has not been able to fend off a number of negative indicators, ranging from negative technical setups to its continued exposure to macro risks. Therefore, despite the optimistic on-chain metrics, the bearish trend cannot be ignored. Here are three reasons why Bitcoin’s market bottom has yet to come.
BTC price breaks rising wedge
Bitcoin’s price drop this week triggered an ascending wedge break. This, in turn, indicates more losses for crypto in the coming weeks. Rising wedges are bearish reversal patterns that form after the price rises within a narrowing, ascending channel, but are resolved after the price breaks down and can result in a drop as low as the height of the maximum wedge.
BTC daily price chart includes ‘rising wedge’ breakout pattern / Source: TradingViewApplying the technical principles on the BTC chart above shows $17,600 as the target for the rising wedge break. In other words, the Bitcoin price is likely to drop by about 25% by September.
Bitcoin bulls misjudge the Fed
cryptocoin.com As you follow, Bitcoin bottomed out around $17,500 locally in June. It then increased by about 45% during the ascending wedge formation. Interestingly, Bitcoin’s upward move has coincided with investors’ growing expectations that inflation has peaked and the Federal Reserve will begin cutting interest rates in March 2023. Expectations arose from Fed Chairman Jerome Powell’s July 27 FOMC statement.
However, the latest Fed dot chart shows that most officials expect rates to reach 3.75% by the end of 2023 before falling to 3.4% in 2024. Therefore, expectations for rate cuts remain speculative.
Fed funds target rate / Source: Federal ReserveSt Louis Fed chief James Bullard also indicated that he would support the third consecutive 75 basis point increase at the Fed’s policy meeting in September. The statement is in line with the Fed’s commitment to reduce inflation to 2% from the current 8.5% level. Bitcoin entered a bear market with the Fed starting an aggressive tightening cycle in March. Accordingly, Bitcoin and other risky assets will remain under pressure for the next few years.
What does the date show as an indicator?
The ongoing Bitcoin price recovery risks turning into a false bull signal given the asset’s similar recovery in previous bear markets.
BTC weekly price chart / Source: TradingViewThe price of BTC rose by nearly 100% during the 2018 bear market cycle. However, it later wiped out gains completely and dropped to $3,200. It experienced similar ups and downs, especially in 2019 and 2022.
