Crypto Outlook: BTC miners in the spotlight.

Since our last crypto report, the price of Bitcoin appears to have moved higher since last week yet appears to continue moving in a relatively sideways fashion. 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

US Department of Energy to look closer at Bitcoin mining.

According to a recent report by CoinDesk, the US Department of Energy or “DOE” will be taking a closer look at bitcoin mining. In particular, the report references that the Energy Information Administration or EIA for short, will be responsible for the surveying of electricity used by a select few US-based miners over the next six months.

Moreover, according to a statement by the EIA, the agency will “…focus on how the energy demand for cryptocurrency mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet cryptocurrency mining demand”. The possibility of the DOE investigation of power usage by BTC miners could be troubling, as the mining process has recently been in the spotlight for its energy consumption and its environmental costs.

As such, should recommendations be made further down the line to reduce the environmental impact and energy consumption, it could potentially weigh on the network’s ability to validate transactions, thus potentially weighing on BTC’s price. Yet, the potential impact from the EIA’s investigation could impact the crypto markets after it has been completed and released. Overall, we emphasize the potential implications of the EIA’s report, once the overall assessment has been completed and is released to the public in July.

Fed’s remains on hold as expected.

The crypto market since last week seems to have been dominated by the Fed’s interest rate decision. The bank, remained on hold as was widely expected, yet during Fed Chairman Powell’s press conference, the Fed Chair appeared to push back on market expectations of 6 rate cuts by the Fed this year.

In addition, in the bank’s accompanying statement it was stated that “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent” appearing to further support the theory of the Fed pushing back on 6 rate cuts this year.

Lastly, the much better-than-expected US employment data for January showcased once again the tightness of the US labour market could allow the Fed to maintain rates higher for a longer period than what the crypto market currently expects.

In conclusion, with the recent financial releases implying that the US economy remains resilient, it may have aided the dollar, whilst potentially supporting the price of Bitcoin, as investor confidence in the US economy, could allow market participants to transfer funds to more “riskier” assets such as Bitcoin.

Lastly, we would also like to note this week’s upcoming ICOs:

Crypto Technical Analysis

BTC/USD Daily Chart

• Support: 39200 (S1), 35300 (S2), 29900 (S3)
• Resistance: 44000 (R1), 48100 (R2), 52100 (R3)

BTC/USD tends to show some signs of stabilization after failing to break above the 44000 (R1) resistance level. We tend to maintain a sideways bias for the coin, and supporting our case is the RSI indicator below our chart which currently registers a figure of 50, implying a neutral market sentiment, in addition to the narrowing of the Bollinger bands which imply low market volatility.

For our neutral outlook to continue, we would like to see the coin remain confined between the 39200 (S1) support level and the 44000 (R1) resistance line.

On the other hand, for a bullish outlook, we would like to see a clear break above the 44000 (R1) resistance line, with the next possible target for the bulls being the 48100 (R2) resistance ceiling. Lastly, for a bearish outlook, we would like to see a clear break below the 39200 (S1) support level, with the next possible target for the bears being the 35300 (S2) support base.

Cryptocurrency CFDs are an extremely high-risk, speculative investment and you may lose all your invested capital. Before trading, you need to ensure you fully understand the risks involved, taking into consideration your level of experience and investment objectives. Seek independent advice, if necessary.

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