Crypto Outlook: What’s next for BTC?

Since our last Crypto report, the price of Bitcoin appears to be continuing on its sideways motion sending some mixed signals about the direction of the cryptocurrency’s direction in the future. In this report, we aim to shed light on the current developments that may influence the future price action of cryptocurrencies, present the potential catalysts that could drive their prices in the near future and finally conclude with a technical analysis of Bitcoin.

Crypto: Overview Report

Fed’s decision tends to dominate

The scenery for the crypto market this week seems to be dominated also by the Fed’s interest rate decision. The bank is widely expected to remain on hold on Wednesday and we have no reason to doubt, yet there is a large question mark looming over the tone of the accompanying statement and Fed Chairman Powell’s press conference later on. On the other hand the easing of inflationary pressures in the US economy as shown also by the latest release of the Core PCE price index for December and the hit on economic activity of the US manufacturing sector tend to suggest that an easing of the Fed’s tight monetary policy is possible.

On the flip side, the relative tightness of the US employment market could allow the Fed to maintain rates higher for a longer period than what the market currently expects. Overall should the bank maintain a more dovish tone indirectly reaffirming the market expectations for extensive rate cuts starting from May onwards, we may see cryptos getting some support as the looser economic conditions in the US may allow for more optimism and thus more crypto investment and vice versa.

Chinese turn towards the crypto market for investment

Reuters recently reported that Chinese investors seem to be turning increasingly towards the crypto market once again. It should be noted that the doubts for the recovery of the Chinese economy, especially as Chinese factories seem to be struggling to keep economic activity afloat, tend to fuel interest for alternative investments. Furthermore, the shaky ground of Chinese developers seems to intensify such tendencies, given also the recent order for Evergrande to be liquidated.

On the other hand, the ban of the crypto market in China provides an obstacle for Chinese investors, yet “grey” middlemen seem to play their role in order for such investment needs to be facilitated, according to the relevant article. It seems that cryptos are promoted as electronic gold and a means to store value in China. Should the appeal of Chinese investors increase and lead them towards a wider diversification of portfolios towards Crypto, we may see the crypto market getting a boost, while possible warnings and a crackdown, or even worries for a crackdown of the Chinese authorities on the crypto market intensify, we may see the crypto market weakening.

BTC ETF’s expand to Hong Kong?

After the approval of BTC ETFs by the SEC in the US, Hong Kong comes under the spotlight, as a number of financial institutions seem to planning BTC ETFs with the first being reportedly filed at the Hong Kong Securities and Futures Commission (SFC), according to Cointelegraph. We had argued at a fundamental level in past reports whether BTC ETFs tend to clarify the crypto environment and generate trust in the investment public for the crypto market, yet at the same time, we had highlighted the antagonistic nature of the spot BTC ETF to the actual cryptocurrency. In any case, we highlight the event that Crypto ETFs are expanding to other markets after the US approval.

التحليل الفني

BTC/USD Daily Chart

• Support: 38530 (S1), 33400 (S2), 29000 (S3)
• Resistance: 44600 (R1), 48975 (R2), 53300 (R3)

BTC/USD tends to show some signs of stabilisation after bouncing on the 38530 (S1) support line and edging higher. We tend to maintain a bias for the sideways motion between the 44600 (R1) resistance line and the 38530 (S1) support line, given the stability of the crypto king’s price action over the past weekend. Furthermore, we note that the RSI indicator remains near the reading of 50, implying a rather indecisive market, that may allow for the sideways motion to be maintained for now.

Also the price action seems to have neared the median of the Bollinger bands, while the upward slope of the 100 MA seems to have eased a bit. Should the bulls take over, we may see the cryptocurrency’s price breaking the 44600 (R1) resistance line and aim for the 48975 (R2) resistance hurdle, which is also a level not reached since November 2021. Should the bears take over we may see BTC/USD breaking the 38530 (S1) support line and aim for the 33400 (S2) support base.

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