Bitcoin price erased gains from the previous session even as the bulls remain in control. Despite the risk-on mood, uncertainty over the path of Fed’s monetary policy has continued to curb the asset’s gains.
What’s driving the market?
On the one hand, a risk-on mood has continued to support bitcoin price and the broader crypto industry. The crypto fear & greed index, which is one of the key measures of the market sentiment, has remained in the greed end of the spectrum in recent weeks. Compared to the previous session’s greed level of 58, the index rose to 63 on Wednesday.
A look at the US equities, another class of risk assets, shows a similar trend. Indeed, cryptocurrencies tend to move in tandem with the country’s stock market. For instance, the tech-heavy Nasdaq Composite index has held steady above the support level of $11,900 for about three weeks now. Dow Jones and S&P 500 have also been on an uptrend since mid-March. The earnings season is one of the leading drivers of the stock market.
Nonetheless, recession woes and uncertainty over the overall health of the global economy continue to hover over the cryptocurrency sector. Recent economic data cemented bets that the Federal Reserve will hike interest rates by 25 basis points during its May policy meeting.
More importantly, there are tapering expectations that the bank will pause on the increases in June. Similar to other risk assets, a rather hawkish Fed may continue to curb bitcoin price gains.
Bitcoin price prediction
BTC/USD erased gains from the previous session on Wednesday to trade below the crucial zone of 30,000. As at the time of writing, the cryptocurrency was down by 2.97% at 29,496.95.
Bitcoin price continues to trade above the 25 and 50-day EMAs as highlighted on its daily chart. Notably, it has risen by over 50% YTD. Even with the persistent recession woes, the bulls will likely remain in control in the short term.
In particular, I expect the asset to continue finding support along the 25-day EMA at 28,738.95. On the upside, the bulls are keen on breaking the resistance at 31,070.29. Uncertainty over the overall health of the US and global economies may result in range-bound trading in the immediate term.
The risk appetite will need to attract enough buyers to boost bitcoin price past the aforementioned level for an opportunity to rally further to the next target at 32,000. Notably, that has been an evasive level for close to a year now. This cautiously bullish thesis will be valid for as long as the crypto continues to trade above the support at 28,000.
