Bitcoin mining

Bulls are fighting hard to maintain the price of Bitcoin above the $30K mark and they have succeeded so far as this area of support is considered by many a make-or-break technical threshold for the digital asset.

An 8% uptick on 30 May turned out to be insufficient to encourage market participants to buy Bitcoin as the price nosedived 6.2% yesterday as the market’s risk-off attitude appears to be persisting.

Downbeat comments regarding the outlook for the United States economy from the head of JP Morgan, Jamie Dimon, appear to have prompted a negative reaction in the markets.

During a conference in New York, the Chief Executive of one of the country’s largest banks stated that an economic “hurricane” is about to come and nobody knows if it will be “a minor one or Superstorm Sandy”.

Dimon, a well-heard voice in the investment community, encouraged investors to brace themselves for what is coming and said that his company is adopting a very conservative approach when it comes to its balance sheet to withstand the downturn.

Inflation in the United States Slows Down but Exceeds Estimates

On 11 May, the US Bureau of Labor Statistics reported that inflation in the country slowed down during April at 8.3% compared to 8.5% the institution reported in March this year. However, this figure exceeded economists’ baseline prediction for the month by 20 basis points.

For assets considered a store of value, as is the case of Bitcoin, inflation should be a positive catalyst for their valuation. However, thus far the performance of the digital asset doesn’t seem to be validating that thesis as BTC has lost 35% of its value in 2022 even though prices in the US economy have surged at the fastest rate in the past 40 years or so.

Crypto enthusiasts claim that the market had already priced in this upcoming increase in the Consumer Price Index (CPI) in 2021 as the value of BTC rose nearly 60% back then while this year the predominant catalyst is a negative one and is associated with a tightening of the Federal Reserve’s monetary policy.

A Closer Look at The Price Action for Bitcoin (BTC)

bitcoin btc price chart

BTC/USD price chart – Source: TradingView

The price of Bitcoin is thus far holding steady above the $30K level as of this morning as it is advancing nearly 1% at $30,040 per coin. This area of support has served as a launching pad for BTC on three occasions in the past and that increases its relevance from a technical perspective.

Momentum indicators are favoring a short-term bullish outlook for Bitcoin as a bullish divergence is showing up in both the Relative Strength Index (RSI) and the MACD.

A divergence occurs when these indicators are moving in the opposite direction compared to the price action. In this case, the two technical indicators are rising at a time when the price is declining.

For any upward movement to be considered a full-blown reversal of the latest downtrend, the price must make a higher high. In this case, Bitcoin must surpass the $40,000 level shortly after bouncing off the $30K threshold to validate a bullish outlook.

On the other hand, if the price breaks below the $30K level the downside risks for BTC would be quite high as the next relevant area of support is found in the mid-to-high $20,000s resulting in a 33% loss at least if such a decline occurs.

Also read: Bitcoin Price Predictions for 2022-2030 – How High Will BTC Reach?

According to estimates from Wallet Investor, a third-party forecasting service, the short-term outlook for Bitcoin is bearish based on an analysis of its technical indicators. For the next 14 days, the algorithm is predicting that the price will fluctuate between $23,900 and $29,350.

Meanwhile, Gov.Capital, another algorithm-based forecasting service, is predicting that the price will rise to $62,200 per coin a year from now resulting in a 100% upside potential if that target is hit.

In summary, even though the short-term outlook appears to be bearish, the mid to long-term outlook for BTC is bullish based on an analysis of its price trend.

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