Bitcoin price at critical time as Celsius files for bankruptcy

• While the cryptocurrency bank Celsius is filing for bankruptcy, bitcoin is stuck in a sideways movement.

• Investors are trying to determine if the bad news is priced in, or if a new dive is coming.

• Analysts at Kraken have pointed to a key chart to understand where the price is going.

Bitcoin must decide. It has hovered around $ 20,000 since the beginning of June, with short falls below and climbs above.

The price action for bitcoin and much of the broader crypto market reflects indecision among investors as to whether all the bad news is priced in or not.

There has certainly been a lot of bad news. An extremely poor macro environment for all risk assets, with high inflation and the Fed going aggressive, has been exacerbated by the crypto-specific meltdown of the blockchain Terra Luna, the “crypto bank” Celsius goes bankrupt and the hedge fund Three Arrows Capital goes under with huge debts.

We have seen a 75% drop in the price of bitcoin from the top, and much of the broader market is down 90% from all-time highs. It looks a lot like a bottom being formed, but there is still uncertainty.

The price has been strongly correlated with the stock market and interest rate expectations, and performs as a high-risk speculative technology stock, rather than a commodity or currency.

While this is clearly a bad thing when the macro environment is negative for equities, it can conversely mean that inflation peaks and begins to fall can be very positive for crypto.

That point may be close, with this week’s consumer inflation forecast of 9.1% in June seen as the likely peak, with next month’s reading expected to be lower.

As always with crypto, wildcards can appear at any time. An example of this is the expectation that the trustees of the collapsed crypto exchange Mt Gox will dump around $ 3 billion of bitcoin on the market in the coming weeks as they work through the legal process of returning money to creditors.

Some see it as the trigger for a new leg down in price, but since it is widely known about it, it can easily fall into the category already priced.

Nick Heale, head of corporate advisory at digital asset broker GlobalBlock, said it was remarkable that bitcoin has remained strong in the $ 20k region despite all the negative news flow.

“The strength of the US dollar indicated by DXY, which measures the strength of the US dollar against six other foreign currencies, is at a 20-year high. The US dollar is currently on par with the euro, indicating the degree of fear in the financial markets in general, as traders flee to the US dollar. “

“It is actually surprising that bitcoin has remained in reach for such a long time, taking into account the geopolitical and macroeconomic factors in general. In China, we have heard reports of bank runs due to the depositor’s accounts being frozen, a default by Sri Lanka., Not to mention the ongoing war in Ukraine and the escalation of COVID measures in China that will continue to affect the supply chain. “

“With this in mind, it is understandable that bitcoin remains technically oversold, despite the fact that the fundamentals of a decentralized asset remain intact,” he added.

Yuya Hasegawa, cryptocurrency market analyst at Bitbank, noted that the same macro picture drives bitcoin as the stock market. Improvement on this front will be the trigger for bitcoin to move higher again.

“Bitcoin started the week lower as risk sentiment worsened before Wednesday’s US CPI announcement. The market was given some hope last week when Fed Waller said a 50 bp rate hike at September’s FOMC meeting is a possibility. Attention to US inflation data and last week’s job report did little to improve the situation. “

Hasegawa added that the upside of bitcoin is likely to be limited until better inflation figures emerge and its 200-week moving average, which is currently around $ 22.6k, appears to offer “strong resistance” for price upside.

However, according to analysts at Kraken Intelligence, bitcoin has already reached an extreme low in terms of the 200-week moving average multiple chart, suggesting that a bottom may be in or at least close. It is certainly a chart to follow closely.

Being 1 times multiple has previously been a starting point for large upward movements, as the diagram here shows.

Should bullish sentiment return and bitcoin again hit 10 to 15 times the 200-week moving average, it would mean a new price peak of between $ 214,987 and $ 322,481, Kraken said.