BTC USD has been under extreme pressure to the downside over the last seven months. The correction has been brutal for the longs that have seen their entire profits for 2021 disappear into thin air. In fact BTC has lost a staggering 78%+ of all profits made from 2020 low to all time high.
The correction has also demystified BTC experts claims that it is an inflation hedge and store of value. In fact what we have seen is that BTC clearly exhibit all the hallmarks of high beta stocks that are highly susceptible to FED tight monetary policy and interest rates hikes.
In its move to the downside Bitcoin has hit some key targets. These include:
1. 100% Fib Extension of the Head & Shoulder pattern.
2. 127.2x Fib Retracement of June/July 2021 low to all time high.
3. 0.786x Fib Retracement of 2020 low to all time high.
All the above targets were in close confluence to each other. IMHO in the short term this will allow BTC to find itself consolidating here and even a small bounce for the longs. However; any recovery will be treated by traders to trim positions and take capital off the table.
Questions is what is the possibility of a further correction.
Federal Reserve started with a 0.25% rate increase and then turned very hawkish tightening monetary policy by raising interest rates by 0.50% and then 0.75%. It also started to offload securities held on its balance sheet which will further tighten monetary policy. The current FED funds rate is likely to jump to 3.5% from the current 1.50% to 1.75% by the year end. As long as FED keeps hiking rates I do not think that BTC will find any support going forward. In fact it is most likely to behave in line with the volatile Nasdaq Composite Index.
The next confluence of targets in close proximity to each other is between 11,191 to 10,886. Both are key Fib levels. Therefore; it is certainly possible that BTC is likely continue its journey to new lows as FED tightens its monetary policy with further interest rate hikes and continues to trim it’s $9 trillion balance sheet.
The correction has also demystified BTC experts claims that it is an inflation hedge and store of value. In fact what we have seen is that BTC clearly exhibit all the hallmarks of high beta stocks that are highly susceptible to FED tight monetary policy and interest rates hikes.
In its move to the downside Bitcoin has hit some key targets. These include:
1. 100% Fib Extension of the Head & Shoulder pattern.
2. 127.2x Fib Retracement of June/July 2021 low to all time high.
3. 0.786x Fib Retracement of 2020 low to all time high.
All the above targets were in close confluence to each other. IMHO in the short term this will allow BTC to find itself consolidating here and even a small bounce for the longs. However; any recovery will be treated by traders to trim positions and take capital off the table.
Questions is what is the possibility of a further correction.
Federal Reserve started with a 0.25% rate increase and then turned very hawkish tightening monetary policy by raising interest rates by 0.50% and then 0.75%. It also started to offload securities held on its balance sheet which will further tighten monetary policy. The current FED funds rate is likely to jump to 3.5% from the current 1.50% to 1.75% by the year end. As long as FED keeps hiking rates I do not think that BTC will find any support going forward. In fact it is most likely to behave in line with the volatile Nasdaq Composite Index.
The next confluence of targets in close proximity to each other is between 11,191 to 10,886. Both are key Fib levels. Therefore; it is certainly possible that BTC is likely continue its journey to new lows as FED tightens its monetary policy with further interest rate hikes and continues to trim it’s $9 trillion balance sheet.
