Fundamental analysis

Mike Novogratz: the “bearish” phase of the market will last another 6 months

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At the 4-hour TF, what we feared happened. Bitcoin gained a foothold above the descending channel, but at the same time remained inside the side channel of $18,500- $24,350. Even though we managed to get out of the junior side channel, this does not change the essence of the matter at all. Bitcoin has been trading in a limited range for four months. The latest outburst of emotions may have been related to the news of Elon Musk’s purchase of Twitter. Even if that’s the case, what’s next? Bitcoin has grown by $2,000 and has chances to grow to the upper limit of the side channel, but it is unlikely that this news from Musk will be the starting point for a new “bullish” trend. We still believe that we can expect strong growth of bitcoin no earlier than six months.

Meanwhile, the head of Galaxy Digital, Mike Novogratz, said that the “bearish” trend in bitcoin may persist for the next 6 months. He, like us, connects the ability of bitcoin to grow with the monetary policy of the Fed, which, as part of the fight against inflation, continues to raise the key rate and will do so at the next 2-3 meetings for sure. Thus, monetary policy will continue to tighten, therefore, the conditions for investing in bitcoin and any other risky assets will remain negative. Sooner or later we will see a pause, Novogratz believes, after which the growth of bitcoin and other digital assets will begin.

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We also believe that it is not necessary to expect strong growth of BTC before the completion of the rate hike program. Another option may also be implemented, in which bitcoin, like the entire cryptocurrency market, will begin to grow no earlier than the beginning of the Fed’s key rate cut. And this can happen only when inflation drops to 4-5%. And only if there are no new geopolitical or pandemic shocks. As you can see, there are too many “buts” and “ifs” in the growth prospects of the first cryptocurrency in the world. Many experts expect new growth of bitcoin in the future, and we are no exception. However, now is not the time. In any case, you should trade on technical signals. Now there is a weak buy signal in the form of a rebound from $ 18,500. But it has already been worked out by the growth to $ 20,700.

In the 4-hour timeframe, the quotes of the “bitcoin” continue to move sideways. We believe that the decline will now continue in the medium term, but we need to wait for the price to consolidate below the area of $17,582-$18,500. If this happens, the first target for the fall will be a level of $ 12,426. The rebound from $18,500 (or $17,582) can be used for small purchases, but be careful – we still have an absolute flat.

The material has been provided by InstaForex Company – www.instaforex.com


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