Bitcoin started a sharp decline yesterday after the publication of the US inflation figures. Where it looked for a while that Bitcoin could recapture the $23,000 mark, the market turned completely after it turned out that US inflation turned out a lot higher than expected. Still, there are analysts who are hopeful about the near future based on technical analysis.
What is going on?
US inflation was expected to come in at 8.1 percent this month. Yesterday at 2.30 pm Dutch time we learned that those expectations were far too optimistic. The market was confronted with an inflation of 8.3 percent. This means that inflation has only decreased by 0.2 percent compared to last month. Almost all markets started a nosedive immediately afterwards.
As a result of these numbers, the Federal Reserve will almost certainly come up with a 0.75 percent rate hike and maybe even a 1 percent hike at the next FOMC meeting. A painful situation that currently affects almost all financial assets. The end of the bear market is a lot further away from us than previously thought because of this new information. But there is also good news.
Hope for Bitcoin
Bitcoin is trading at around $20,300 after yesterday’s misery, writing a minus of 9.30 percent for the past 24 hours. On the 4-hour chart, Bitcoin has completed a Fibonacci retracement to 61.8 percent, forming a pattern known in technical analysis as a “hammer.” A hammer means the bears are exhausted and the bulls can take control shortly.