Bitcoin grew by almost 21%! US inflation report on Tuesday!
As per last week’s projection, Bitcoin has plunged to the $ 19,000 region. It was in the vicinity of this support that the demand reaction appeared; as a result, the BTC quotations increased by more than USD 3,800, i.e. nearly 21%, over the past few days.
This surge caused the BTC rate to break above the local resistance of $ 20,650 and is now approaching another resistance of around $ 22,500. If this barrier was also broken, then Bitcoin could continue its upward rally towards the previously defeated upward trend line, which is the lower limit of the parallel growth channel observed from mid-June to mid-August, or further up to USD 24,500.
If the currently tested resistance was rejected, the BTC could at least return to the area of the last defeated resistance (now support) of $ 20,650.
Considering the multitude of important events in the near future, it seems that it will depend on whether the currently tested resistance will be defeated or rejected.
The first of these will be the publication of a report on consumer inflation (CPI) in the United States scheduled for next Tuesday, September 13, 2022. Economists estimate that after dropping to 8.5% in July from 9.1% in June, the dynamics of consumer price growth slowed down in August to 8.1%.
So it can be expected that any reading higher than expected will speak in favour of the third consecutive 75bp rate hike in the federal funds rate, which would threaten another BTC decline. Following this line of thinking, any reading below the expected level may induce the Federal Reserve (Fed) to reduce the scale of the interest rate hike to 50 basis points, which in turn would signal the approaching of the Fed’s monetary tightening cycle that has been ongoing since March this year and could constitute a kind of support for further Bitcoin growth.
It is worth recalling that although the US inflation report will be presented on September 13, we will have to wait until September 21 for the Fed’s monetary decisions.
Looking at the Ethereum quotes, we notice that the price of this cryptocurrency has increased by almost 26% since August 29, thus reaching the region of USD 1780. A permanent breach of this level could open the door for further appreciation towards USD 2,000, but only a break above USD 2,000 could signal a potential for larger gains.
One of the key events for ETH (apart from the publication of the CPI inflation report in the US) this week will be Merge, i.e. Ethereum’s transition from proof-of-work to proof-of-stake consensus, thanks to which miners will be replaced with validators, the new ETH supply and the amount of energy needed to maintain the grid.
Although the transition from PoW to PoS can be described as a kind of technological revolution for ETH, the most important thing for changing the course will be the reduction of new supply, not the technological aspect itself.
A smaller supply with unchanged demand could contribute to an increase in the ETH exchange rate. The question, however, is whether Ethereum will be able to break away from Bitcoin, with which this cryptocurrency is highly positively correlated.
If not, the possible increase in the ETH rate could turn out to be only temporary, after which the market could again succumb to pressure from macroeconomic events, particularly the Federal Reserve’s monetary policy. Therefore, there is still a risk that the ETH exchange rate will drop further to USD 1,400 or even to USD 1,250.
Bitcoin Cash (BCH)
Since mid-August this year, Bitcoin Cash has remained in the horizontal trend between $ 112 support and $ 133.50 resistance. The increase observed last week brought the BCH price back to the upper limit of this system. Any defeat of this resistance could therefore drive a further increase towards USD 145.
However, considering consolidations are usually corrective formations, it seems highly probable that before a permanent return to the path of growth, the BCH exchange rate will slump to around $ 112 or even $ 97.
Litecoin’s prices have risen by more than 22% recently, returning to the area of a highly significant resistance of $ 65. If this barrier were to be broken, the LTC could continue to rally north towards the $ 73 and downward trend line.
However, a possible breakdown or rejection of the currently tested resistance will probably depend on tomorrow’s US CPI inflation reading. Reading the index above 8.1% could rebound the LTC rate from the currently tested level and return to 52 USD.
The price of the cryptocurrency Polygon fell by more than 28% between August 14 and 20 this year, slipping below the upward trend line. This sale will stop; it was low in the area of technical support in the region of USD 0.75, where there was a demand response.
The increase observed later made the MATIC price increase by over 22%. However, considering the small dynamics of this rebound, it seems highly probable that the market will return to the downward path shortly, slipping towards USD 0.75, USD 0.61, USD 0.45, or even USD 0.32.
Looking at the XRP quotations, we will notice that the price of this cryptocurrency has remained within a parallel growth channel since mid-June this year. After rebounding from the upper limit of this system at the end of July this year, the XRP rate stuck in a horizontal trend just below the local resistance of USD 0.39.
The supply pressure observed on August 18 and 19 contributed to breaking the bottom out of this system. Moments later, the upward trend line was also broken, which was the lower boundary of the entire growth channel.
The sell-off then stopped around $ 0.3340 technical support, where there was a slight demand response on August 20 this year. However, the subsequent rebound only contributed to a re-test of the upward trend line and the previously defeated support (now resistance) of $ 0.36, which was the lower limit of the earlier consolidation.
In reaction to the hawkish speech of the Fed chairman two weeks ago, the XRP rate rebounded from this resistance and fell below the support of USD 0.3340.
The sell-off only stopped around $ 0.32, and for the next few days, the XRP remained within a relatively narrow range between the support of $ 0.32 and the resistance in the region of $ 0.3340.
The increases observed last week contributed to the breakout of the upper boundary, resulting in the XRP rate returning to the technical resistance area of USD 0.36 and the upward trend line being the lower boundary of the earlier channel.
If this barrier is dropped, we could expect a decline toward USD 0.3340 in the near future.