BTC started falling again yesterday and today, at the time of writing, dropped below the price of 20,000. What are the reasons for this decline and what should be prepared for?
BTC is falling
After breaking through the bearish structure formed by the cryptocurrency for several weeks, BTC has once again entered a downtrend. The current decline is as a result of breaking through this structure, but also negative fundamentals to which the markets are exposed as a whole. Except for BTC stocks and S&P 500 are also falling, with which the cryptocurrency shows a high correlation during this decline. The index itself can be an important indicator that further declines in cryptocurrencies may await us.
S&P 500 it made a higher high that was rejected and subsequently declined as we can see in the chart below. This one descending structure does not indicate anything positive due to the negative macro economic fundamentals in the markets in general.
Chart: SPX/1D. Source: Tradingview
FED
According to the diary The Wall Street Journal must be seen behind yesterday’s decline the speech of Fed Chairman Jerome Powell who further confirmed the position of the American Central Bank at the conference in Jackson Hole continue to sharply increase interest rates. According to analysts, investors were expecting more positive news that would indicate an easing of rate hikes next year, but Powell evidently disappointed them.
Powell confirmed that The Fed must continue to keep rates high until inflation is under control, even at the cost of rising unemployment.
“We will continue to do this until we are confident that we have completed our work,” Powell declared.
According to Oscar Munoz, strategist at TZ Securities, Powell focused his speech on investors “to end the idea that the Fed will soon end its tightening cycle.”
Chart: BTC/USD. 4H. Source: Tradingview
The reaction to this was declines in shares, bonds and cryptocurrencies. BTC fell by over 8% and fell again below the $20,000 level. This decline opens the way for him to further price levels below the local minimum, which he reached at the price of $17,500. The decisive moment awaits us in September, when the FED will announce a rate hike.
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