Bitcoin and other cryptocurrencies remained relatively stable on Monday, maintaining their elevated levels near the peak of a recent rally. However, there is a concerning signal from a technical indicator that suggests prices may be susceptible to retracing some of their gains.
Over the past 24 hours, the price of Bitcoin has experienced a minor decrease of less than 1%, dropping below $36,950. Although it has slipped further from its recent peak of around $38,000, it still resides within a range that has held steady for almost a week after the latest stage of a month-long surge. Bitcoin, the largest digital asset, has witnessed an impressive 40% increase in value in less than a month, prompting some to call for the start of a new bull market. This surge signifies a departure from the previous period of subdued volatility and trading volumes.
Similar to the Dow Jones Industrial Average and S&P 500, Bitcoin is expected to respond to macroeconomic data this week, which could greatly impact the outlook for interest rates. As borrowing costs play a crucial role in the demand for risk-sensitive assets, market participants will closely monitor these developments.
Although traders have been cautiously optimistic about the Federal Reserve concluding its rate hikes, Fed Chairman Jerome Powell recently hinted that further increases are not out of the question. Consequently, economic data to be released this week holds significant importance. The consumer-price index (CPI) inflation reading scheduled for Tuesday, along with Wednesday’s retail sales data, could potentially influence expectations and lead to an adjustment in rate forecasts.
Market Outlook for Bitcoin and Altcoins
According to Yuya Hasegawa, an analyst at Bitbank, there is cautious optimism in the wider financial market regarding the slowing inflation and demands in the U.S. This sentiment could potentially lead Bitcoin to test the $38,000 mark.
However, the technical market outlook for Bitcoin appears to be dimming after weeks of consistent gains. This could exert downward pressure on crypto prices as a whole. Hasegawa highlighted that Bitcoin’s relative strength index (RSI) is diverging from the price trend, which typically signals a potential trend reversal. Historically, such divergences have lasted around one month before the price changes its course. Therefore, it is possible that Bitcoin’s price trend may start to reverse towards the end of the week.
Moving beyond Bitcoin, Ether, the second-largest token, experienced a marginal increase of less than 1% to reach $2,050. This boost in Ether’s value can be attributed to the recent news that BlackRock has filed for a spot Ether exchange-traded fund (ETF). On the other hand, altcoins displayed a mixed performance. Cardano saw a 4% decline, while Polygon recorded a 5% increase. Memecoins, such as Dogecoin and Shiba Inu, both experienced more than a 1% drop in value.