Is Bitcoin price correction ahead? Where is the support?
Despite the second in a row increase in interest rates by the US Federal Reserve (Fed) by 75 basis points and announcements of possible similar action at the September meeting of the Federal Committee on Open Market Operations (FOMC), US Treasury yields fell with the dollar, and stocks and cryptocurrencies rebounded on Wednesday evening.
The market reaction to last week’s Federal Reserve meeting may indicate that investors are not afraid that aggressive monetary tightening will continue to weigh on the quotations of risky assets, which are undoubtedly stocks and cryptocurrencies.
In September, there may be a third interest rate hike by 75 basis points. The actual chances of such a move may slowly diminish with the appearance of signals indicating some slowdown in the US economy.
Fed chairman Jerome Powell himself indicated that the bank would set monetary policy at every meeting, not as it did recently when he gave clear indications on the size of the next rate hike.
“While another substantial hike could be appropriate at our next meeting, it will depend on the data released by then,” Powell said at the press conference, adding that the institution will slow down the pace of interest rate hikes at some point.
These comments contributed to the clear rebound observed in the cryptocurrency market's second half of last week.
As a result of this fact, over the past few days, Bitcoin has been purchased for over USD 24,000.
It is worth noting, however, that this increase stopped near the upper limit of the parallel upward channel that has been going on since mid-June this year, where the first supply reaction appeared at the end of the week.
So if this resistance is rejected, BTC quotes could slide down to $ 21,000, where the upward trend line runs, which is the lower boundary of the formation.
Looking at the Ethereum quotes, we can see that the price of this cryptocurrency increased after rebounding from the technical support of 1000 dollars by more than 77 %. This increase helped to overcome several technical resistances of $ 1,250 and $ 1,400.
This trend only stopped around the next resistance in the $ 1720 region. If Bitcoin falls shortly, Ethereum could also suffer from it. In such a case, it would entail rejection of the currently tested resistance and drop towards $ 1,600, or even further to $ 1,400.
However, there is a high probability that the sale may only be temporary and will ultimately turn out to be only a correction, after which the ETH price will return to the upward path.
Looking at the Polygon (MATIC) quotes, we will notice that the price of this cryptocurrency increased in just one month, from June 18 to July 18 this year, by over 211 % — from less than $ 0.32 to above $ 0.98.
This tendency has thus come close to the resistance we indicated in the amount of USD 1.00. Although there was a supply reaction near this level two weeks ago, the subsequent declines did not last too long, and the market returned to this resistance area after last week’s Federal Reserve meeting.
However, last weekend there was a supply reaction again. Therefore, it is more and more likely that this barrier will be rejected again, which could signal a downward potential towards USD 0.75.
However, it seems highly probable that these declines will prove to be only a temporary correction, after which the MATIC rate will return to the up path. A break above USD 1 will fuel a further appreciation towards USD 1.33.
We could also expect the Avalanche to experience at least a short-term downward trend. Over the past few days, the AVAX rate has approached the upward trend line, which is the upper limit of the parallel upward channel, where a slight supply reaction appeared already at the weekend. If only this resistance is rejected, then the AVAX rate could drop to the area of USD 20.5 or even to the area of USD 19. It is there that the two closest support levels are located.
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. The upward trend observed over the past few days caused the cryptocurrency’s rate to return to the upper limit of this system, where the first (so far, small) supply response appeared at the weekend.
If the currently tested resistance is rejected, the XRP could slide towards the upward trend line marking the lower boundary
of the mentioned channel, i.e. in the region of USD 0.33.
Looking at the Cardano quotations, we notice that the ADA rate has been moving horizontally (in consolidation) since mid-June this year, between the support of USD 0.4150 and the resistance in the region of USD 0.55.
As a result of the recent increase, the price of this cryptocurrency returned to the area of the upper limit of this system, where the supply response reappeared at the weekend.
So, if this resistance is permanently rejected soon, the ADA rate could drop back to the area of USD 0.4150, where the lower limit of the current system is.
Looking at the Polkadot (DOT) quotes, we notice that this cryptocurrency has been moving in a horizontal trend (in consolidation) for almost two months, between the support of USD 6.30 and the resistance in the region of USD 8.50.
The upward trend observed over the last few days made the DOT quotations return to the upper limit of this system. Unlike many cryptocurrency projects, however, there has been no above-average supply response so far. If this resistance is overcome, the DOT rate could continue its rally north towards $ 10.50.
If there is a more significant supply response shortly, which signals a potential rejection of the currently tested resistance, then the likelihood of a decline towards $ 6.30 increases.