Relevance up to 09:00 2022-06-11 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
June risks becoming one of the most boring months for Bitcoin in the past six months. And there is nothing wrong with that, given the turbulence that the asset and the cryptocurrency market experienced during the period from late February to May 2022. Bitcoin is moving within a narrow range of $29k–$31.5k and failing to realize another round of decline or an opportunity to rise in price. Despite the lack of success in trying to revive the upward trend, the cryptocurrency is giving more and more hints of a possible growth in the near future.
There is a steady increase in long positions on some cryptocurrency exchanges, which indicates that the market is ready for a long upward trend, rather than impulse jerks. There is also a significant outflow of BTC coins on the main crypto platforms, thanks to which Bitcoin stocks on the platforms have reached a minimum over the past 4 years. And the positive dynamics persists even taking into account the fact that almost all BTC owners who have entered the market over the past two years are at a loss.
For the second week in a row, venture capital investors are choosing to invest most of their capital in Bitcoin. Thanks to the stabilization of quotes in a narrow range, the asset again becomes attractive in terms of long-term capital storage and risk hedging. The same idea was supported by representatives of the central bank of Europe, who said that inflation is with us for a long time and the agency is preparing for a significant inflow of capital into Bitcoin. This trend can be seen on the dominance chart of the main cryptocurrency. The indicator has reached a peak point in September 2021, which indicates a growing interest in the coin in a new quality.
Another key factor that indicates the likely growth of the cryptocurrency is a significant decrease in the correlation with stock indices. As of June 10, SPX and NDX showed a daily drop in the region of 1-2% and acquired a pronounced downward trend. At the same time, Bitcoin continues to consolidate in the $29k–$31.5k area. This indicates a significant decrease in the level of correlation between financial instruments. Bitcoin breaks the vicious circle of association with high-risk assets and is once again becoming in demand as a hedge against inflation.
At the same time, it is important to understand that growing interest does not mean an increase in the emergence of a powerful upward movement in the coming months. The value of Bitcoin is now determined by two fundamental factors. The supply of BTC coins continues to decrease due to the ongoing cycle of accumulation, creating a shortage in circulation. Given the limited emission, this will allow the cryptocurrency to significantly increase its value.
The second factor we have discussed many times and in great detail is the duration of high inflation. The longer the market suffers from high consumer prices, and at the same time feels the first effects of stagflation, the more attention large and small capital will pay to BTC as an alternative to fiat.
As for the short-term perspective, in the coming days, the likelihood of increased volatility increases due to a combination of factors. Let's start with the fundamentals. On June 10, inflation reports will be published, and if they turn out to be higher than expected, then we can expect negative conclusions from the head of the Fed, Jerome Powell. After the publication of conclusions on the growth of consumer prices, the head of the department will make a statement regarding the monetary policy of the regulator. The market is especially sensitive right now, and therefore these events will determine the movement of the markets for the next few weeks.
In technical terms, on the daily chart of the cryptocurrency, there are prerequisites for the formation of the "wedge" pattern. The creation of such a figure has always been accompanied by an increase in the level of volatility, as the corridor for price movement becomes narrower and provokes investors to break through it.
Technical indicators are moving flat and do not indicate the likely direction of the breakdown of BTC/USD quotes. This suggests that it is the fundamental background that will determine the direction and strength of the impulse breaking through the "wedge."