InstaForex

October 29, 2021

Bitcoin is trying to restore the upward trend, but to no avail yet

 Yesterday, Bitcoin move up to the Ichimoku cloud on the four-hour timeframe, but it did not manage to consolidate above it. Therefore, the downward trend is currently continuing, and selling near the Ichimoku cloud might be an interesting trading idea. However, not everything is as clear as it seems at first glance. Last night, Bitcoin initially declined by $ 3,500 thousand, and then rose by $ 4,000. Moreover, this did not happen during the publication of the US GDP. When GDP was published, the price of the digital coin was quietly rising, which is absolutely logical. It was already mentioned in the previous articles that the less likely the Fed's QE program is to be curtailed in November, the higher the probability of further growth of Bitcoin and US stock indices. And the probability of a gradual curtailment of QE, starting in November, has sharply fallen recently due to reports on Nonfarm and GDP. Therefore, at first glance, it seems that Bitcoin has simply adjusted against the upward trend of recent months, and is now preparing to restore the "bullish" trend.


This assumption is very reasonable since one should not forget about the "hype" of the current trend and the fact that Bitcoin is showing the most impressive growth at such a "hype" time, or at certain points in time. Bitcoin purchases increase, which provokes even larger purchases of cryptocurrencies due to the influx of small traders and investors who also want to make a profit. In this case, the Ichimoku cloud, which now has a rather narrow appearance, can be used as a provider of trading signals. Once it is overcome, it will mean a very likely continuation of the growth of Bitcoin quotes. If there is a rebound, then, at least, a new round of correction may occur.


However, the general fundamental background is currently on the side of the world's first cryptocurrency. The Fed, even if it announces a reduction in QE in November, still will not mean an immediate curtailment of this program. The American regulator will continue to fill the economy with liquidity for at least another 7-8 months, so the markets will feel just fine, and inflation may continue to remain high.


It is worth noting that high inflation is another reason for the possible continuation of Bitcoin's growth since most investors use it as a means of protection against the depreciation of their capital. It turns out that the two most important factors remain on the side of Bitcoin. However, there is not much other news from the field of cryptocurrencies right now. The situation for bitcoin may worsen in the future because there is now a clear trend to tighten regulation of the cryptocurrency sphere around the world. Some countries are completely abandoning cryptocurrencies and digital assets, seeing them as a threat to the stability of the national economy. And from our point of view, these measures will only become more stringent over time.


In any case, next year may be indicative. According to many experts, a lot of institutional investors have invested in Bitcoin at this time, who are not in the habit of selling off an asset as soon as it starts to decline. It is the institutions that can keep this cryptocurrency from serious collapse. Therefore, when two new taxes on bitcoin are introduced in the States at once, and the Fed starts curtailing QE, then this will be the "aptitude test" for Bitcoin.


The trend on the four-hour timeframe shifted to a downward one, as the price consolidated below the Ichimoku cloud. In this case, sales with the target level of $ 56,500 are now relevant. A rebound from the cloud can be used as a new signal to sell. But if traders manage to consolidate above it, then buying with targets of $ 64,700 and $ 67,000 will become relevant.