Turbulent Time Ahead

Crypto Compass 109

"In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten." - Peter Lynch

• BTC suffered a big correction over the weekend, and the market is starting to recover. However, the 50-day EMA could provide support; even if we break down further, the $60k level is expected to be a strong support, marking the bottom of the current consolidation range, with the top of the range being as high as $74k.

• The market is likely to remain in a "buy on the dip" phase, suggesting continued bullish sentiment. If BTC were to fall below the $60k support level, it could find further support at the $52k level based on previous price action. This level may attract buyers and help stabilize the market, maintaining the overall uptrend.

Figure 1: BTC’s Price Evolution with Cipher B, RSI and ATR indicators.

• The main factor to major correction over the weekend are crucial macro events coming up this week. PCE, PPI, and CPI inflation data are all rising, creating a complex situation for the Federal Reserve. The central bank faces a challenging dilemma: balancing the need for looser monetary policy to prevent a recession and stimulate recovery, with the necessity of maintaining tighter controls to prevent runaway inflation.

• The Federal Reserve's balancing act is complicated by the potential impact on the US debt, as higher inflation could assist the government in repaying debt with cheaper dollars. However, this could come at the cost of average citizens who live paycheck to paycheck and may suffer from increased costs of living. The upcoming April jobs report could exacerbate the situation, creating volatility that BTC will need to navigate.

Figure 2: Different indexes evolution through time.

• Recent corrective retracements have led to a significant decline in funding rates, approaching levels close to zero. This shift indicates reduced pressure for further liquidations, allowing both long and short positions in the perpetual market to stabilize. This market reset suggests a potential end to the prevailing uncertainty and sideways consolidation, with the market poised for a renewed upward trend.