Bitcoin and other cryptocurrencies showed little movement on Monday, maintaining elevated levels close to the peak of a recent rally. However, a particular technical indicator is now flashing, suggesting that prices might be prone to retracing some of their gains.
Over the past 24 hours, the price of Bitcoin has declined by less than 1%, dipping below $36,950. Although it has slipped further from its recent peak near $38,000, it continues to remain within a range that has held steady for nearly a week following the latest phase of a month-long rally. This surge represents an impressive increase of nearly 40% in less than a month, with market enthusiasts calling for the beginning of a new bull market. The digital asset has successfully emerged from a prolonged period of subdued volatility and trading volumes.
Similar to the Dow Jones Industrial Average and S&P 500, Bitcoin is expected to react to macroeconomic data this week, which could significantly impact the outlook for interest rates. As borrowing costs play a crucial role in determining the demand for risk-sensitive assets, these developments are highly relevant.
While traders have recently expressed optimism regarding the Federal Reserve's conclusion of rate hikes, Fed Chairman Jerome Powell indicated that further increases remain a possibility. Consequently, economic data scheduled for this week will be closely monitored. The consumer-price index (CPI) inflation reading on Tuesday, coupled with Wednesday's retail sales data, could serve as catalysts for adjustments in rate expectations.
Bitcoin Faces Potential Test at $38,000 as Market Sentiment Shifts
Analyst Predicts Slowdown in Inflation and Demand for Bitcoin
According to Yuya Hasegawa, an analyst at crypto exchange Bitbank, the wider financial market is optimistic about the latest U.S. Consumer Price Index (CPI) and retail sales data. If these indicators show slowing inflation and decreased demands, Bitcoin could potentially test the $38,000 mark.
Technical Market Signals Raise Concerns for Bitcoin's Momentum
On a closer look at the technical market analysis, it appears that the future may not be as bright for Bitcoin. After weeks of consistent gains, there are signs that the price trend might be losing momentum, which could impact crypto prices overall. Hasegawa highlights a significant factor in this assessment—the relative strength index (RSI). The RSI currently shows a divergence from the price trend, typically suggesting a potential reversal. In fact, this pattern has occurred twice this year and tends to last approximately one month before the price changes course. As we approach the end of the week, Bitcoin's price trend may start to reverse.
Ether and Altcoins Experience Mixed Performance
As for other cryptocurrencies, Ether, the second-largest token, experienced a modest increase of less than 1%, reaching $2,050. This upward movement can be attributed to the recent news of BlackRock filing for a spot Ether exchange-traded fund (ETF). Meanwhile, altcoins displayed a mixed performance. Cardano saw a decline of 4%, while Polygon observed a 5% increase. Memecoins, on the other hand, experienced losses, with both Dogecoin and Shiba Inu declining more than 1%.
