Although the weekly RSI seems to have undergone a bullish divergence, a continued drop in the BTC price might invalidate it. Meanwhile, some factors, like the comments from Gary Gensler, may have caused ETH to fall after the Merge.
The price of Bitcoin (BTC) recently pulled back from a long-term resistance line and formed a bearish candlestick pattern. It is now at risk of breaking below a long-term horizontal support zone.
The Federal Open Market Committee (FOMC) plans to discuss the best solution to the inflation problem. The group raised federal funds rates by 25 basis points (bps) in March, 50 bps in May, and 75 bps in June. Interest rates might rise by 75 bps (82%) or 100 bps (18%), raising the target level to 300-325 or 325-350.
Renowned political economist Benjamin J. Cohen talked about previous periods of high inflation and rate-hike cycles of the Fed. He said it shows evidence that it will not bottom out until it gets closer to its next round of rate cuts. However, he pointed out that some historical instances indicated that the SPX bottomed out when rate hikes ended.
In 2009 and 2020, interest rates dropped almost a year before the S&P500 bottomed out. Since the Fed still raises its interest rates, the current S&P 500 low might not have arrived yet.
Movement of the Price of Bitcoin after Its All-Time High
The value of BTC has fallen since it reached an all-time high of USD 69,000 in November 2021. The bearish movement has led to a local low of USD 17,622 in June 2022.
Despite an upward movement shortly after, it recently pulled back from the descending resistance line and formed a bearish candlestick pattern.
The weekly relative strength index (RSI) seems to have undergone a bullish divergence. However, a continued drop in the price might invalidate it as there is no confirmation yet.
The price of BTC might also break below the USD 19,000 horizontal support zone. A drop below that area could trigger a quick decline to new lows as that area coincides with yearly lows.
A close below that area would confirm a bearish outlook, but a break above the resistance line would invalidate it.
Bitcoin is trading at around USD 18,671 and has accumulated a 5.9% loss over the last 24 hours. While its daily trading volume is above USD 37.08 billion, its market capitalization is about USD 357.65 billion, according to CoinGecko.
Meanwhile, Ether Pulls Back below USD 1,300 after the Merge
The drop of Ether (ETH) below USD 1,300 might be more important news than the fall of Bitcoin. Many investors expected to benefit from a positive price movement shortly after the Merge.
A few factors may have caused the price of ETH to drop after the long-awaited Ethereum upgrade. For example, Gary Gensler, the chairman of the SEC, suggested that ETH might become a security after the transition to PoS.
According to Santiment, two wallets have processed more than 45% of Ether transactions, causing concerns about centralization. In addition, some analysts pointed out that research and development company Flashbots transmitted over 82% of the Ethereum block after the Merge.
Ether is trading at around USD 1,307 and has accumulated an 8.3% loss over the last 24 hours. While its daily trading volume is above USD 19.02 billion, its market capitalization is about USD 158.43 billion, according to CoinGecko.
By Alexander Salazar