Bitcoin on February 25, 2023 – Caught up by inflation, the king of cryptos stumbles

The rebound of the king of cryptos already threatened? – While it was close to crossing over to the right side of the barrier, the price of Bitcoin (BTC) faltered at the time of the publication of the PCE, the FED’s favorite inflation statistic. The latter came out at 5.4% in January against 5% in December. But the most worrying point is that the PCE excluding volatile elements is also galloping back to 4.7%, the same level as last November.

The latest technical analyzes concerning the king of cryptos are far from alarming, however. Because for the time being, the supports remain preserved. However, this unexpected thunderbolt of inflation in the United States could reshuffle the cards for both bulls and bears. Bitcoin missed the mark at a time when indecision could resurface again. Especially since it has sufficiently consumed most of the good news during the previous months.

In a market context where the inflation wall could rise, let’s take a close look at the alternative scenarios for Bitcoin in the days/weeks to come.

Towards a further rise in the dominance of Bitcoin?

Despite the crypto bear run in 2022, the dominance of Bitcoin is evolving in a tidy or horizontal channel between 40 and 48% since May 2021. This indicates that some altcoins have been able to stand out positively at a time when tensions had temporarily eased. On the one hand, inflation has still remained in a deflationary trend since June 2022. And on the other hand, financial conditions were curiously relaxed according to the latest figures from the National Financial Conditions Index (NFCI).

Nevertheless, the rebound of the beginning of the year 2023 on cryptos which brought back a total market capitalization slightly over $1 trillion, resulted in a jump from BTC dominance. To the point that he returns to the middle of his range. It makes you wonder if we were perhaps on the wrong track about a possible neutralization of the bear run. Especially since the poor publication of the FED’s favorite statistic to assess inflation, could reinforce its monetary tightening.

In the event of a continuation of the rise in Bitcoin dominance, the 48% zone would be in the sights. And given the long duration of his tidy, we could see a violent exit to the upside with the objective of reaching 58% in the medium to long term. Which would mean Bitcoin would flex its muscles as the crypto market leader for better and for worse.

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Bitcoin in weekly units – New backlash in sight?

Last week, the price of Bitcoin was on the verge of potentially breaking the resistance of $26,000. But the bad surprise of the PCE in January could possibly call into question this favorable scenario. We will have to wait until next week to see more clearly. History of knowing if we would move towards new tests on the supports recently crossed.

The current weekly bearish candle is currently indicative of the bulls’ inability to move into high gear. Which unfortunately makes the bears happy, who themselves were very worried at the start of the year. With the consequence that prices and the Chikou Span still extend their respective status quo below the Kumo (Ichimoku Cloud).

From now on, doubt could creep into the minds of the bulls. Even if there is no danger in the house, a consolidation in the direction of the Tenkan and the Kijun, not far from $20,000 (or 2017 ATH) could materialize in the event of a potential resurgence of inflation in the United States. This would force the FED to raise rates to levels higher than those estimated by the consensus of economic analysts.

A throwback on the $20,000 would allay the fears of the bulls. Because precisely, we would validate one of the conditions for a neutralization of the BTC bear run since his last ATH in November 2021, i.e. at least two higher supports to draw a possible ascending line. This would lead us to a new bullish leg. Initially, it would make it possible to get rid of the $26,000. And in a second step, the course of the king of cryptos would return to neutral territory inside the Kumo with the $30,000 within range.

Conversely, the 2017 ATH breakup would turn out to be bad news. We would go where the king of cryptos was at the beginning of the year or at the worst of the FTX affair around $16,000. This perspective would not escape the bears who would see themselves relaunching the machine of a third wave of correction.

Bitcoin in daily units – $22,000 in sight before $20,000?

Despite yesterday’s pump, the price of Bitcoin remains above the Kumo in daily units. At the same time, he attempts to lean on the Kijun. Nevertheless, a break in one of the Ichimoku curves would extend the fall towards $22,000a level halfway to $20,000.

And it is perhaps from this intermediate support that we would learn more about the excitement or not of the bulls in the short term. If the sinking of $22,000 were to occur, we would risk partially breaking the bullish momentum of the beginning of 2013. In this sense, the king of cryptos would go towards $20,000 with prices going slightly below the lower limit of the Kumo, the Senkou Span B (SSB).

A second support at $22,000 near the Kumo upper limitthe Senkou Span A (SSA), on the other hand, would relaunch the race towards $26,000. This would also leave the field open for the Chikou Span to break through this major resistance in daily units.

In summary, Bitcoin is officially experiencing its first difficulties in 2023. As it approaches a major level both graphically and psychologically, it is rightly taking a slack hoping that the first alerts of an end of deflationary trend of inflation in the United States is just a side note.

The key signal for investors to watch carefully remains whether or not the $20,000 will be held. Referring to the scenarios discussed above, a break in Bitcoin price inside the Kumo in weekly units would alert us to a momentary annihilation of downside pressure. In contrast, seeing Bitcoin pull away from the 2017 ATH again would mean uncertainties persist. In which case, the threat of a resumption of the bear run is still relevant.

Moreover, the current recovery of the dollar could have bad repercussions. Just before the release of the January PCE yesterday, the king of crypto bulls preferred to ignore it. But from now on, the situation could turn sour, if the next figures of the CPI (or official inflation in the United States) of March 14 should encourage the FED to slow down its monetary tightening.

Therefore, the neutralization of the crypto king’s bear run since its last ATH in November 2021 would be highly compromised. The bears would come out of their hibernation at a time when serious doubts remain about the character of inflation: transitory or structural. With the apprehension that the second answer is gaining ground.

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