Bitcoin: Price growth cannot be expected unless this condition is met
- BTC is significantly correlated to the traditional financial markets.
- For the price to grow, there must be a disconnect.
While Bitcoin is [BTC] Its price may have risen by 32% year-to-date (YTD), the continued growth in the price of the royal coin, in the face of prevailing macroeconomic conditions, is largely dependent on its ability to break away from traditional financial markets, two CryptoQuant analysts have found.
Pseudonymous analyst Grizzlies considered BTC’s 200-day moving average and realized price and found a pattern previously observed in market bottoms.
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This pattern, which suggests the formation of a long-term bottom, is characterized by the crossing or overlap of the 200-day moving average and the realized price, which moves from top to bottom. This pattern was observed in 2019, 2015 and 2012, after which BTC experienced a long-term upward trend.
According to Grizzly, in these highly inflationary times, the predicted long-term upward trend could follow if BTC detaches from assets like stocks and acts as a store of value.
Source: CryptoQuant
Another analyst Baro Virtual assessed BTC’s Net Unrealized Profit/Loss (NUPL) ratio. The analyst found that the current market situation was similar to the NUPL index movement in spring 2019 when it broke its 365-day moving average and BTC experienced strong bullish momentum.
After facing rejection at the medium-term resistance area of 0.15-0.25, BTC’s NUPL index tested its 365-day moving average, which acted as support.
According to Baro Virtual, a successful grab of the 365-day MA and overcoming the resistance area could lead to solid bullish momentum.
For the upside breach to happen, BTC’s price needs to be “decoupled” from the broader financial markets, Baro Virtual believed. He further stated,
“Also very important is the question of whether there will be a final decoupling of Bitcoin and the US stock market in the current cycle, or whether Bitcoin will become hostage to traditional macroeconomic indicators.”
Source: CryptoQuant
The BTC market refuses to cut ties with traditional markets
On February 1, the Federal Reserve raised interest rates by a quarter of a percentage point, marking the smallest rate adjustment since March. On this news, BTC’s and ETH’s prices fell slightly by 0.2% and 0.3% respectively.
Read Bitcoins [BTC] Price prediction 2023-2024
It is no longer news that BTC’s price shows high sensitivity to announcements such as inflation data or changes in Federal Reserve interest rates.
In fact, over the past year, BTC’s price reacted every time interest rates were raised.
Source: CryptoRank
During the recent Federal Reserve meeting, Fed Chairman Jerome H. Powell indicated that “a couple more” interest rate hikes were being considered to ensure that inflationary pressures are effectively kept under control.
If history is anything to go by, one can expect BTC’s price to react to any further interest rate hikes as the year progresses.
