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31.05.2023 04:08 AM
Is Bitcoin preparing to revive its uptrend?

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The daily chart shows that Bitcoin intends to revive its uptrend. However, it is still too early to draw such a definitive conclusion. The cryptocurrency is still below the critical line and inside the Ichimoku cloud, but its recent growth could indicate a transition to a bullish phase. Currently, it is better to assess Bitcoin's prospects on the 4-hour chart, where a descending channel remains intact. On the daily chart, there's an equal probability of moving in either direction. We believe that a downward correction could still resume.

In most cases, you should pay attention to the fundamental background. However, there have been very few important news events recently. Essentially, the most significant data currently revolves around the Federal Reserve's interest rates and the issue of the US debt ceiling. Everything is clear regarding the Fed's interest rates. If inflation does not start to rise sharply or stop decreasing, the central bank simply has no reason to continue rate hikes. It doesn't make sense. Currently, the market expects at most one more monetary tightening. And it is unlikely that Bitcoin has started to rise again based on this factor.

However, resolving the issue of the US government debt (which is not fully resolved yet) could potentially trigger a new rise for Bitcoin. It is quite difficult to explain how Bitcoin is connected to government debt, but the fact that the cryptocurrency started to rise around the same time that US President Joe Biden announced a breakthrough agreement with Republicans indicates a correlation. If this is indeed the case, then this news has already been priced in. There is a 99% probability that there will be no default in the US. We just have to wait for the vote in Congress.

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We still don't see compelling reasons for Bitcoin to appreciate right now. The overall fundamental background remains favorable for it, but the market has already factored in all possible bullish factors. It is worth noting that the Fed has not even begun to hint at possible monetary policy easing, and the rate cuts are scheduled for next year. We don't expect Bitcoin to show significant growth anytime soon, but it is important to closely monitor the descending channel on the 4-hour chart.

On the 24-hour chart, Bitcoin has made several attempts to surpass the $29,750 level but has been unsuccessful. As a result, the cryptocurrency has started a downward correction. In the near future, we expect Bitcoin to fall towards the $25,211 level, which is not far away. The succeeding movement will depend on whether it manages to breach this level or not. You can consider buying when a corresponding signal forms, such as a bounce from $25,211 or a trend line. The 4-hour chart and the channel also hold significant importance.

Paolo Greco,
Analytical expert of InstaForex
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