Forex Analysis & Reviews: 01.09.2022

01.09.2022 09:44 AM

BTC dependent on fundamental factors and may retest swing low soon. Outlook for September

Despite all expectations and forecasts, the flagship cryptocurrency is still hovering around the important psychological level of $20k. The digital asset slowed and managed not to fall below the barrier. There have been many factors for such price behavior, but the main reason is significant liquidity in the $19.5k-$20.8k range. The coin has been trading in this very zone for seven days. However, bitcoin will have to leave this range eventually, and there is a higher likelihood that the price will go down.

Since mid-August, just one strong bullish candlestick has formed, with other patterns on the chart being bearish and candlestick colored green. This is a clear indicator of a bearish trend. Still, we see how the downward movement slowed amid the absence of serious fundamentals and news. The weakening of the downtrend shows the dependence of the price on fundamental factors. Other than that, neither a bullish nor bearish impulse can start due to the low trading activity on the BTC network.

Therefore, fundamental factors will be the main driving force for the digital asset this fall. Experts do not see bitcoin, as well as the whole crypto market, recover and are cautious about such price movements. It is hard to disagree with this assumption. However, the rise in BTC between mid-July and mid-August clearly shows the dependence of the cryptocurrency on fundamental factors. The uptrend began with a monthly correction of the US dollar index, which is the main beacon for investors in the current bear market.

The situation is unlikely to change, so DXY will still be driving the market. The Fed's Mester dropped subtle hints that the benchmark interest rate should be raised above 4% in order to curb inflation. Taking into account the correlation between BTC and stock indices, this statement could mean that the crypto market has little growth potential. At the same time, the stock market and the crypto market are forecast to rise during the US Senate election in November as the first signs of a market recovery could come ahead of this event.

November is in two months. So, there is every reason to believe that bitcoin will retest the swing low. The digital asset is on the verge of falling as low as $17.7k. The daily chart clearly shows that BTC/USD is moving down from the upper limit of the $17.7k-$25k range. The price consolidated at around $20k. Some investors are collecting liquidity.

Technically, bulls are now weaker. The stochastic oscillator tried to form a bullish crossover but got stuck in the oversold zone. The RSI also failed to move up. BTC is clearly bearish. So, if the daily candlestick closes below $20k, the downtrend will deepen and the price will hit $17.7k. Otherwise, if the price settles above $20.5k, a bullish scenario could become possible, but this is still highly unlikely.

Despite the negative fundamental background and the clear dependence of bitcoin on macroeconomic factors, demand for BTC remains strong. The active accumulation phase has ended, and the supply on exchanges continues to fall. According to Santiment data, the volume of bitcoin on crypto exchanges decreased by 40% from the May 2020 high. Glassnode reports that long-term holders continue to accumulate bitcoin. Due to its dependence on fundamental factors, the digital asset could resume growth in the long run.

This fall might be a difficult time for the flagship cryptocurrency. The coin is now under strong pressure from both fundamentals and internal factors. Therefore, an uptrend is unlikely. Fundamentals will be driving the crypto market.

The situation might change by November when the first turning-point results of the Fed's aggressive policy will come and elections to Congress will take place. Until then, digital gold will remain in a narrow range and hit the new swing low. A stop order could be placed in the $20.5k-$20.8k range.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.