Bitcoin recorded a significant positive divergence early Monday, following seven days of trading below $30,000. The crypto is trading at $30,536.93 at press time, a decrease of 2.5 percent from the previous week, according to Coingecko data.
In the preceding 24 hours, the worldwide cryptocurrency market capitalization increased by almost 2 percent, reaching nearly $1.3 trillion. However, the total trading volume of cryptocurrencies was up by more than 28 percent to $62.13 billion.
Bitcoin has struggled in recent weeks as the U.S. Federal Reserve has increased interest rates and inflation has remained up, increasing the likelihood of further monetary tightening.
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Bitcoin No Longer A Hedge Vs. Inflation?
In the past, Bitcoin was recommended as a hedge against inflation, but in recent months it has proven to be closely associated with risk assets, such as the Nasdaq 100, which has fallen in response to broader market volatility.
Over the past 10 days, Bitcoin’s price has been trading flat, consolidating around $30,000. Bitcoin may find it difficult to recapture its former glory, since investors appear to be avoiding riskier assets in the present inflationary environment.
According to Mudrex Co-Founder and CEO Edul Patel:
“Despite a nearly 3 percent increase over the past 24 hours, Bitcoin was unable to breach the US$30,000 threshold. Over the last week, Bitcoin’s price remained unchanged, as it struggled to move beyond its support.”
The Dow Jones Industrial Average (DJIA) has decreased for nearly eight consecutive weeks, and major indexes have followed suit.
As the S&P 500 declined, a strong correlation between it and the crypto markets became clear. BTC ending the week at $30,000 represents its seventh straight weekly closing in the red territory, according to Darshan Bathija, CEO and Co-Founder of Vauld.
BTC total market cap at $578 billion on the daily chart | Source: TradingView.com
For his part, popular crypto analyst Lark Davis writes:
“Bitcoin is exhibiting a massive bullish divergence on a daily scale. The last time something similar occurred was in 2021. Could this portend a massive rally?”
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Crucial Next Two Weeks For BTC
Genesis Global Trading’s Noelle Acheson and Konrad Laesser said in a Saturday note that the price of Bitcoin will likely fluctuate between $29,000 and $31,000 over the next two weeks.
Some economic-data releases, such as U.S. gross domestic product (GDP) or inflation figures, “may alter the narrative,” according to Acheson and Laesser.
According to analysts at WazirX Trade Desk, BTC’s monthly trend has broken below the ascending channel pattern.
Meanwhile, the next level of resistance for BTC is anticipated to be $40,000, while the nearest level of support is $24,000.
Bitcoin’s monthly relative strength index is currently at 47, its lowest level in more than two years. The support level for the RSI is 43, according to analysts.
Featured image from Al Bawaba, chart from TradingView.com