Bitcoin is the most important cryptocurrency in the world owing to its large market capitalization and the impact it has on other altcoins. Although several other coins have entered the market since its launch, and many of them are capable of delivering more features for investors, Bitcoin has remained the most popular digital asset in the world. Much of its appeal stems from the fact that it can preserve its value and has prices that are more consistent over a longer time compared to those of its peers. This is no small feat in the world of cryptocurrencies, where fluctuations and price changes are commonplace as a result of the decentralized nature of the blockchains.
But that doesn’t make the price shifts a more minor nuisance at all, especially when considering the fact that they are impossible to predict and it is very likely for investors to be caught unprepared. The Bitcoin price chart shows that during these episodes, the possibility of losses becomes very pronounced, and depending on the extent of the transactions, investors may face substantial challenges. For this reason, traders are looking to come up with strategies that can provide them with as much protection as possible. This means having a thorough look at historical price movements, as well as the several factors, both internal and external, that could influence price movements.
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Employment data
Bitcoin reached a new all-time high at the beginning of November, breaking its previous records as a result of the US presidential elections. The general consensus had been that the period of consolidation would continue on the BTC blockchain until September or October at the earliest. Many are now beginning to rethink those estimations, and it seems that it has finally reached its peak. The current fourth quarter is arguably one of the most successful in crypto’s history.
This is because the latest employment data shows the markers of a slowing economy. Although other figures and metrics must also be taken into account to establish a broader perspective on things, these numbers are also enough for the Bitcoin market to start acting accordingly. On June 4th, the US Bureau of Labor Statistics showed that the country had slightly over 8 million job openings in April and around 0.8 unemployed persons per job opening. This is the highest ratio recorded since February 2021.
An economic slowdown will also lead to lower inflation, and both of these have historically been key bullish indicators in the world of Bitcoin. The CPI, the US Consumer Price Index, which measures inflation levels, showed results that were approximately 0.1% lower in the middle of May, and Bitcoin surged by about 7% as a result. The growth occurred over the span of five days, with BTC moving to $71,432.
Predictions
Right now, market analysts believe that this scenario could repeat itself in the near future. Another 0.1% decrease might seem inconsequential when considered by itself, but when put into perspective, it would bring the CPI down to 3.3%. If this level becomes a reality, investors will have reason to rejoice, with some researchers seeing this event as having the potential to bring BTC to a new all-time high that surpasses the one achieved earlier this year. Others hope that the previous all-time high will be fully secured at last so that a new growth period can commence soon.
According to this scenario, Bitcoin has already left a consolidation triangle behind and is ready for positive price developments. This means that Bitcoin could be on the path to reconquering its previous record level of $73,679 by the beginning of July. Others are more reluctant to consider this possibility and believe that further certainty and more stable support levels would be just as beneficial.
Crossroads
Although the year started on a very positive note for Bitcoin, corrections soon followed, and the coin is now at a crossroads again. It goes without saying that this isn’t an appealing situation for the majority of marketplace users, who were expecting stronger performance overall after the setbacks and losses of the previous two years. At the beginning of June, the simple moving average, also known as SMA among investors, indicated that there was convergence across three different timeframes, the 5-, 30- and 50-day periods. This metric is used to calculate the average of the previous prices during a certain price window.
Volatility rates remain low and have been so over a relatively extended period of time. In the aftermath of this record rally, they are predicted to cool off even further. While the market appears very powerful at the moment, consolidation could lead to a retrace as well. It could always go at least two different ways in crypto markets, even in more secure ecosystems like Bitcoin. For this reason, investors must always remain patient and attentive in order to ensure that their portfolios will remain safe and that their transactions are more likely to result in gains rather than losses.
Strong buy
Bitcoin is currently positioned in the “strong buy” area. This is according to the latest research and takes into account both the exponential moving average and the SMA. The former is a somewhat different indicator that places more weight on recent prices than historical ones. The “strong buy” refers to a recommendation made by analysts and refers to any asset that is likely to outperform in a dramatic fashion and overtake the average market. The return of comparable holdings in the same sector or industry is also included sometimes as well.
When Bitcoin gets this designation, it means that it has received the official endorsement of analysts. BTC is above the SMA, and trading above the moving average is a favorable sign for traders. It also means that the moving average itself could serve as a support level for Bitcoin in the event that the price falls.
Although the cryptocurrency market is still aiming to return to its previous levels, most investors are optimistic about the market’s potential and have already begun working to consolidate their lists of holdings.
