Bitcoin has declined by $7,000 over the past six days. Thus, we have every reason to assume that the formation of the upward wave d is completed. If this assumption is correct, then now the instrument has moved on to building a new downward wave, which is wave e.
No one will deny that the news background sometimes has a strong impact on bitcoin and cryptocurrencies. Usually, this even applies only to negative news background. When all is quiet and calm and central banks are pumping money into their economies while keeping rates low, bitcoin tends to rise. But now it's a completely different matter. Rates are about to begin to rise, and in some places, they have already begun. Central banks no longer intend to print money, and the Fed is going to start reducing its balance sheet, which has ballooned to $9 trillion. Thus, now is an unfavorable time for bitcoin.
I believe that it is on this news and expectations of tightening monetary policy by the market that bitcoin has been declining for several months now. And over the next month, it may drop to $27,000, where wave e can be considered completed. However, geopolitics also intervened, and since bitcoin is a risky asset, it began a new decline along with the stock markets.
And again, geopolitics
So much has been said about geopolitics in recent weeks that I would not like to elaborate on this point. At the same time, this may continue to further reduce the demand for risky assets, which include all cryptocurrencies. Thus, any further escalation of the conflict in Donbass or Ukraine could lead to a wave of new bitcoin sales. In the coming weeks, the danger will be that the troops of the DNR and LNR may go on the offensive in order to capture all the territories of the Luhansk and Donetsk regions. And Russian troops can help them in this, which immediately entered the Donbass as soon as Putin signed a decree recognizing the independence of the LPR and DPR.
The market is negative
Despite the fact that there are still quite a few investors and analysts in the market who continue to believe in bitcoin and its growth in 2022, the mood has changed dramatically to bearish in recent months. More and more experts say that this year there is no reason to expect a renewal of last year's peak. Moreover, some predict a "crypto winter" that will last until 2025.
American economist and writer Nassim Taleb criticized bitcoin, calling it "entertainment for losers." According to Taleb, bitcoin is not really a hedging tool for either inflation or geopolitical risks. Otherwise, why at this time, when inflation is off scale, and the geopolitical situation is at its highest degree, Bitcoin is declining, Taleb wonders. "Actually bitcoin is the exact opposite," said the bestselling author of The Black Swan. Previously, Taleb has repeatedly criticized bitcoin, while noting the positive aspects of blockchain technology.
The construction of the downward trend section continues. At this time, the current wave counting takes on a five-wave form and can continue its construction with targets located near $29,117 and $26,991, which equates to 0.0% and 61.8% Fibonacci within wave e. A successful attempt to break through the $41,470 mark, which corresponds to 38.2% Fibonacci, indicates the market is ready for further sales. Thus, I expect another downward wave to be built. Considering what a difficult news background is now, this wave can be very long.
In many ways, everything will depend on how long the escalation of the conflict in Ukraine will last and how far everything will go. In the coming weeks, everything will really depend on geopolitics, and on March 15-16, the Fed will raise the rate. It's hard to come up with a worse news background for bitcoin.
