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10.03.2023 12:51 PM
Bitcoin crashes below $20k amid negative macroeconomic forecasts: should we expect an upward correction?

After a week of consolidation, Bitcoin is approaching the end of the trading week by updating the local day below the $20k mark. The cryptocurrency consolidated near the $22.5k level and was prone to decline, which happened.

The fall in the price of Bitcoin was influenced by many fundamental and technical factors that formed a negative sentiment among investors. The current week showed that the period of local thaw is over and another storm is waiting for the markets in the near future.

Fundamental background

Let's start with the good news, which finally came from the labor market. Initial jobless claims in the U.S. reached 211,000 against the forecast of 195,000. This is a key point that indicates a gradual weakening of the labor market.

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If this develops into a trend, we can expect a more moderate monetary policy of the Fed regarding the key rate. That said, it is reported that there are 5 million more job openings in the U.S. than unemployment, so the formation of a sustained momentum may not take place.

Jerome Powell's speech also did not reassure markets, and markets now expect a 50 basis point rate hike in March, to 5%–5.25%. Investors are confident that the rate will be raised by another 25 bps in May and June. A rate cut is not expected until January 2024.

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Investment giant Citi shares investors' forecasts and raises the peak of the key rate to 5.5%–5.75%. The coming months will be difficult for markets and especially high-risk assets due to large liquidity problems and falling quotes of instruments such as SPX and BTC.

What is happening in the crypto market?

The situation on the crypto market has also become more complicated due to the start of the procedure for the liquidation of the crypto-friendly Silvergate Bank. At the same time, Santiment reports that buy the dip sentiment is forming in the market, but despite this, the market capitalization may decrease even more.

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U.S. President Joe Biden also called for a 30% tax on all electricity used to mine Bitcoin and other cryptocurrencies. The politician also announced a revision of the tax policy for crypto traders who do not make a profit.

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It also became known that only 1.82 million BTC coins are at the disposal of Bitcoin miners. This represents about 9.4% of the total volume of cryptocurrencies in circulation and is the lowest in 2023. This indicates that the miners are selling their reserves.

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At the same time, there is a large outflow of BTC from centralized exchanges, which indicates the continuation of the accumulation period. Yesterday, about 6,760 BTC was withdrawn from the crypto platform, which is equivalent to $141 million. The total BTC supply on exchanges is 11.8%, the lowest since December 2017.

BTC/USD Analysis

As a result of March 9, Bitcoin formed the largest red candle since November 2022, which is ironic because it is the situation in the fall of 2022 that the crypto market returns to. The bearish volumes continued to rise today, causing the asset to break through the $20k level.

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It is noteworthy that we still do not see a strong buy-off of buyers, which indicates an update of older price lows. Technical indicators are gradually falling into the oversold zone, and BTC is moving to storm $19.4k and $18.9k.

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The key support zone within the current decline is the $18.3k level, where there was a serious buying of bulls. With only $323 million liquidated in the last 24 hours, the big players will allow the price to drop lower to collect more substantial liquidity.

Results

Bitcoin is again in the framework of a strong downward movement, intensified by negative sentiment, internal market problems and another deterioration of the macro situation. Therefore, it is likely that a deeper correction awaits us before buying off and trying to recover above $20k.

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