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Asset Watch

Heads or tails for Bitcoin?

 

Wednesday, June 15, 2022

With Bitcoin battered amid inflation’s reign and worries about a hawkish Fed, the cryptocurrency has been in free fall in recent days. Moreover, with more than 23% of the market cap wiped out this week (as of Jun. 14), investors’ diamond hands aren’t as strong as they once were.
On June 14, CNBC reported that Coinbase – one of the largest cryptocurrency exchanges – is laying off 18% of its staff. CEO Brian Armstrong told employees, “We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter and could last for an extended period.”
But could suppressed sentiment provide us with a buying opportunity?
Heads or tails for Bitcoin?

Aiding the bull case, Bitcoin futures crashed below the support of $28,800. However, the intraweek low was $20,775, and it’s no coincidence that support materialised near the 2017 weekly high of $20,650. As a result, if the latter holds, Bitcoin has a pathway back to $28,800.

 

Bitcoin’s weekly RSI fell below 27. The last time this occurred (December 2018), the selling stopped and consolidation ensued (see the arrows). Meaning that green shoots may provide a reprieve.

 

However, with the Fed on a hawkish warpath and global central banks also dealing with unanchored inflation, higher interest rates have been Bitcoin’s Kryptonite. Therefore, a breakdown below $20,650 puts $12,600 in play. This level is close to the 2019 and 2020 weekly highs.

 

Should you hold or head for the exit?


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