11 Feb 2022 Samantha McLauren
U.S Inflation Strikes On The Crypto Market
Bitcoin (BTC), as well as the rest of the crypto market, experienced a sharp trend reversal, as the sector clearly reacted to U.S. inflation figures and the ongoing NASDAQ 100 sell-off, which also transferred onto cryptos.
The world’s largest crypto to date pulled back 2,41%, failing to build enough support around $45,000, which sent its price down to $43,473. The rest of the crypto sector followed suit, with Ethereum (ETH) struggling to stay afloat over $3,100, after a nearly 5% price decline, while Ripple (XRP) tumbled eight percent to $0.818 per token.
Source: Crypto Browser
Other top-performing crypto projects like Terra (LUNA), Polkadot (DOT), Shiba Inu (SHIB), and Polygon (MATIC) experienced a similar downtrend. The overall market capitalization for the crypto sector shrank again to sub-$2 trillion territory.
The main culprit of the widespread bearish sentiment is the United States Department of Labour revealing that consumer prices have increased to 7.5 percent over the past year, which makes the U.S inflation rate is the highest recorded in 40 years in the country.
The news about U.S. inflation rates climbing up has put immense pressure on investors and traders, which also reflected the NASDAQ 100 price movement, which ended the day with a 2.10% loss. Furthermore, the U.S. FED is planning to take a more aggressive rate hike path for 2022.
Meanwhile, Bitcoin’s price moving in sync with major indices further justified the IMF’s concerns over the interconnectedness of cryptos and the U.S equity markets. Bitcoin, for example, fell from $44,973 to an intraday low of $43,254, before bouncing back to strike an intraday high of $45,837. The high did not last long, as Bitcoin saw its price sliding back to sub-$44,000 and into the red. All of Bitcoin’s price movements coincide with the trend patterns of the NASDAQ 100.
Bitcoin Fear & Greed Index Going Up
Despite the price swings due to U.S. inflation levels, Bitcoin’s Fear & Greed Index remained relatively stable, locked in at 50/100. The index pulled back slightly from 54/100 on Wednesday, but the price fluctuation did not induce a slide in the “Fear” zone of the metric, showing the largest crypto to date has strong support of around $43,000.
The index denoted investor incentive readiness, as a swing in the green means investors are more likely to buy a given asset, while a swing in the red represents fear of a given asset losing its price.
Other technical analysis instruments suggest the first major resistance for Bitcoin at $45,161 if the number one crypto manages to overcome its $44,208 pivot, which would induce a bullish run. If the run pushes past the $45,000 levels, Bitcoin could test resistance at $47,000 before any pullback. However, the run for Bitcoin may not be as smooth as projected, since, in order to come close to testing $47,000, the top-performing crypto has to first overcome Thursday’s high of $45,837 and second major resistance at $46,791.
On the downside, if Bitcoin fails to move through the pivot, it would bring the first major support level at $42,578 into play, with a second major support level sitting at $41,625.
Nevertheless, Bitcoin’s moves would largely depend on the NASDAQ 100 price action.
Meanwhile, Bitcoin’s technical signals remain bullish. For example, the 50-day exponential moving average (EMA) has pulled further away from 200-day EMA after this week’s bullish cross, with a bullish cross of the 100-day through the 200-day EMA would further support the move towards $50,000 levels. However, for Bitcoin to remain on the upside, it has to remain above the 50-day EMA, currently sitting at $42,270 levels, which could send Bitcoin to sub-$42,000 levels.
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