Bitcoin dips to $27k, altcoins trade lower ahead of the debt ceiling vote
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(Kitco News) - Financial markets took a downturn on Wednesday amid strong U.S. jobs data and a looming debt ceiling vote as investors remain cautious in the face of rising global economic uncertainty, with U.S. markets pricing in another 25 bps hike in interest rates in June.
Concerns related to the looming debt ceiling vote weighed heavily on stocks, which fell under pressure at the market open and remind underwater throughout the trading day. At the closing bell, the S&P, Dow and Nasdaq were all in the red, finishing the day down 0.51%, 0.31% and 0.63%, respectively.
Data provided by TradingView shows that Bitcoin’s (BTC) price trended down throughout the morning trading session, with the top crypto hitting a low of $26,900 in the early afternoon before dip buyers arrived to bid it back above support at $27,100.
BTC/USD Chart by TradingView
The early morning sell-off resulted in June Bitcoin futures prices trading lower in the early hours, according to Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: Kitco
“While a price downtrend on the daily bar chart has been negated, the bulls at mid-week can show no follow-through strength from early-week gains,” Wyckoff said. “Thus, the bulls and bears are now back on a neutral overall near-term technical playing field.
Daan Foppen, an analyst with MN Trading, noted in the Wednesday issue of the Trade Letter that “After witnessing a significant upward move over the weekend, we observed a retracement in the market at the beginning of this trading week. This retracement has completely filled the CME gap that occurred over the weekend.”
BTC/USD 1-day chart. Source: MN Trading
“As everyone knows, we've had a rather dull price action in the past few weeks with nothing much happening. We consistently held support around the $26.3-26.6K region,” Foppen said. “Around the temporary bottom, many people started shorting, expecting lower prices, and this resulted in a liquidation event that led to an acceleration to the upside.”
Moving forward, Foppen sees one of two scenarios playing out. For those looking to short the market, he noted that, “We saw a breakout over the weekend, where we took liquidity. We saw deviation above the range high and have now fallen back into the range,” he said. “Returning to the range high could provide a short opportunity on the bearish retest.”
BTC/USD 2-hour chart. Source: MN Trading
For those looking to long the BTC market, Foppen said, “The area to go long is actually now, but I find the situation quite tricky, mainly because you quickly encounter resistance again.”
“There are certainly arguments to say that going long is the way to go,” he said. “We finally have a structure shift after breaking a high, and we are now seeing a bounce in the FVG (floating volume gap). This is an area that needs to be maintained if we want to see higher prices,” referring to the zone between $26,800 and $27,100.
BTC/USD 4-hour chart. Source: MN Trading
According to a tweet posted by MN Trading founder Michaël van de Poppe, “If this zone sustains as support & Bitcoin will be able to reclaim $27,500, everything looks like we'll continue the upwards trend. [A] drop beneath $26,600 and we'll see new lows.”
On the whole, altcoins followed Bitcoin’s lead lower on Wednesday as financial markets showed weakness heading into the debt ceiling vote by Congress.
Daily cryptocurrency market performance. Source: Coin360
Linear Finance (LINA), Conflux (CFX) and Magic (MAGIC) were the hardest hit by the days downturn, experiencing price declines of 10.5%, 9.95%, and 9.0%, respectively.
The overall cryptocurrency market cap now stands at $1.135 trillion, and Bitcoin’s dominance rate is 46.1%.