Can Bitcoin’s support hold amid increased risk sentiment this week
Bitcoin has been on a downward trajectory in the last seven days after encountering resistance just above $24,000. The resistance retest confirms Bitcoin’s currently upward channel as it gradually recovers from the harsh downside in June.
However, this week’s market events highlight increased uncertainty and the risk that it might lose its support.
The aforementioned events include the FOMC meeting, as well as CPI and employment data releases towards the end of the week. The FOMC meeting is perhaps the most important event because investors react depending on whether the U.S. Federal Reserve reduces or increases interest rates.
<p lang=«en» dir=«ltr» xml:lang=«en»>1/ #BTC and risk assets have pumped higher on FOMC events this year, only to sell off after, is this time different?June's FOMC meeting saw the federal reserve deliver a 75bps hike – the single largest since 1994. More hefty hikes are expected before inflation is 'normalised'. pic.twitter.com/kN76A1q0Rs
— tedtalksmacro (@tedtalksmacro) July 25, 2022
The Consumer Price Index (CPI) helps create a rough picture of consumer spending. Employment data, on the other hand, helps to gauge the purchasing power in the market.
If unemployment is on the rise, then people have less to spend and likely not enough to invest. This information ultimately helps to gauge economic strength and it affects asset prices.
When the economy is weakening, investors tend to avoid risk-on assets such as Bitcoin. And, when the economy starts growing stronger, it favors a risk-on sentiment.
Unfavorable data might trigger a stronger sell-off than anticipated, thus pushing Bitcoin below its current ascending support.
Source: TradingView
Bitcoin’s demand has so far managed to match the existing selling
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