Bitcoin trades flat as economic data weighs heavily on risk assets
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(Kitco News) – The crypto market saw another day of sideways trading on Monday as the weakness present at the end of last week continued into the weekend as traders continued to weigh the prospect of higher interest rates longer and what that means for risk assets. .
Stocks rose early in the morning as Wall Street looked to rebound from its worst week of the year, but early gains faded as the day wore on and economic data showed new orders for manufactured durable goods plunged 4.5% in January , the biggest drop since April 2020. At the close of US markets, the S&P, Dow and Nasdaq all managed to end in the green, up 0.31%, 0.22% and 0.63% respectively.
Data provided by TradingView shows that Bitcoin (BTC) bulls tried to stage a rally higher on the day but were rejected at $24,000, leading to a pullback to a daily low of $23,255 before reinforcements arrived to bid it back above the $23,400 support .
BTC/USD 4-hour chart. Source: TradingView
Despite the loss of momentum, “bulls still have the overall technical advantage in the near term as a price uptrend is in place on the daily chart, but only just,” according to Kitco senior technical analyst Jim Wyckoff, who warned that “bulls need to show soon new power to keep alive the uptrend and maintain their technical edge.”
Economic data weighs on crypto prices
The reasons for the loss of momentum were highlighted in Monday’s trading note from analysts at Eight Global, who noted that last week’s personal consumption expenditures (PCE) data came in higher than expected, while previously released data was also revised higher.
“Looking at CPI, PCE and PPI data as a whole may have shattered some overly optimistic projections that inflation is disappearing quickly and for good, and this is being reflected in prices,” Eight Global said. “Not to an extent where upward trend structures on higher timeframes were broken, but enough to become more cautious again.”
The growing threat of a potential 50 basis point hike is also rattling investors, as the latest CME Group estimates say there is a 30% chance the Fed will need to raise more than the expected 25 bps increase.
“A big question is also whether the Fed will raise its forecast for where it estimates the benchmark interest rate will peak at its next board meeting in March,” Eight Global said. “The comments and tone of Fed officials this week may give us an early indication of what to expect.”
Looking at the Bitcoin chart, Eight Global identified $23,600 as the price level BTC must tilt back to support if traders hope to make a run at the $25,000 resistance level.
BTC/USD 1-Day Chart. Source: Eight Global
“A rejection here is likely to prompt a retest of the tentative channel bottom, now in sync with the 50SMA, and even the 0.382 fib level around $21,700 that we already saw tested for support earlier this month,” the analysts said. “A retest of the latter would not scream strength, but as long as support holds in that area, there is no structural reason to YOLO short.”
Eight Global identified the 50-day simple moving average, which is at $22,400, the 0.382 fib level found at $21,700, and a retracement of $23,600 as price levels to potentially look to open a long move ahead.
“The RSI has come down all the way to around 50, giving it plenty of room where we could see another push to the upside,” they said. “The thesis that if $25,000 is turned into support in a sustained manner, $28,000 is the next likely HTF [high time frame] goal, remains.”
Altcoins follow Bitcoin’s lead
While the broader altcoin market traded in the red on Monday, a handful of tokens managed to buck the trend and post double-digit gains.
Daily performance in the cryptocurrency market. Source: Coin360
NEM (XEM) was the biggest gainer of the day, with a 43.08% price increase to trade at $0.0592, followed by a 13.22% increase for Gitcoin (GIT), a 12.9% gain for RSK Infrastructure Framework (RSK) and an 11.22% increase for Stacks (STX).
The total cryptocurrency market cap is now at $1.065 trillion, and Bitcoin’s dominance rate is 42.2%.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
