What to expect from Bitcoin this week?

Specialist RBC Crypto analyzed the market situation and assessed the prospects for the movement of the Bitcoin exchange rate for the next seven days.

“Fundamental factors on the side of Bitcoin”

BitRiver financial analyst Vladislav Antonov

The week turned out to be extremely volatile for Bitcoin. Having started trading at around $67,600 on Monday, the top cryptocurrency experienced a sharp decline on Tuesday due to changing expectations for Fed rates following the release of US inflation data. By mid-week, bearish sentiment took over the market – the price collapsed by more than 17% to a low of $60,775, erasing about $478 billion from the cryptocurrency market capitalization.

After the US Federal Reserve meeting and Jerome Powell's speech, a rebound followed amid a fall in the dollar index and a rise in stock indices. The Federal Reserve has signaled a possible policy easing in 2024. On Wednesday, BTC/USDT recovered 9.53% to $67,840. The consolidation continued on Thursday with a close of $65,501.

On Friday, March 22, the BTC/USDT pair fell by 2.60% to $63,796. The dollar continues to scare the crypto market, as it was able to recoup all losses after the Federal Reserve System (Fed) announced monetary policy. The US dollar benefited from optimism about the US economic performance.

Economic data this week indicates the US economy is growing at a strong pace. The updated forecasts showed policymakers raising their forecast for real gross domestic product (GDP) for 2024 to 2.1% from 1.4% in December. However, inflation has also been revised upward, with the personal consumption expenditure (PCE) price index now forecast at 2.6% from 2.4% previously. Finally, the unemployment rate for 2024 was lowered from 4.1% to 4.0%.

The focus is on US inflation as measured by PCE. The data will be released on Good Friday. In many countries, traditional exchanges will be closed.

In terms of interest rate cuts, three cuts are likely this year, with the average federal funds rate at 4.6% in 2024, implying three cuts of 25 basis points (bps) each. Expectations for a June rate cut are 75%, according to CME's FedWatch tool.

Since the crypto market is low-liquid, roller coasters are an integral part of it. Now let's move on to market analysis.

At the time of writing this review, Bitcoin costs $65,153. After falling to $60,775, the price recovered to $68,240. Then the tailwind changed to a headwind. A long rest against the backdrop of a strengthening dollar caused a correction to increase by 76%, to $62,260. Negative dynamics were added by pairs with BTC, where Bitcoin was temporarily sold.

During the recovery to $68,240, the trend line of the downward movement from $73,777 was broken. Yesterday, the price fell below it again, recording a false breakout. This line now passes through $66,040.

The dollar index closed Friday and the week higher. Bitcoin is developing a local downward trend within an uptrend. According to BitRiver estimates, the bullish trend has support at $58 thousand, so many experts call this level to end the correction from $73,777. The probability of a drawdown to $58 thousand is more than 70%.

The situation for Bitcoin could change if the price rises to $71,500. Then the “wavers” would see the growth potential to update the historical maximum rate. And sellers are unlikely to actively sell Bitcoin after the last two-day correction.

Fundamental factors remain on Bitcoin's side. In a highly volatile market, corrections cannot be avoided. Investors flock to volatile markets with price fluctuations of tens of percent over a few days. When there is a desire to make money, most people succumb to the hype and forget about the risks in marginal markets, which leads to massive liquidations, sharp pullbacks and significant losses. Stop-outs are observed in all markets, so greed can only be cured by taking it out of the market or revising your trading style and risks.