Bitcoin Sending Mixed Signals at $23,000, Capped Upside Potential?

Bitcoin continues to trend sideways heading into the weekend, and with less trading volume on exchanges, the cryptocurrency is pointing to potential losses. BTC price gave up last week’s gains but was able to hold current levels as critical support.

At the time of writing, bitcoin (BTC) is trading at $23,000 with sideways movement over the past 24 hours and a 3% loss over the past week. The top cryptocurrency by market capitalization has been severely outperformed by Binance Coin (BNB) and Polkadot as risk appetite appears to return to the cryptocurrency market.

BTC price crosses sideways on the 4-hour chart. Source: BTC USDT Tradingview

In a recent report by trading firm QCP Capital reiterates its position: The upside potential for BTC price remains capped after a bullish response to macroeconomic events over the past week. The firm expects Bitcoin and Ethereum to move sideways over the next few weeks, with potential short-lived rallies.

These could translate into price action based on three bullish macro factors: the US Federal Reserve (Fed) has hinted at less aggressive monetary policy, inflation may have peaked in the near term as reflected the fall in the price of raw materials and the potential rise in the markets result from this.

QCP Capital believes that many participants in the traditional finance market have taken short positions, potentially expecting more losses in recent earnings seasons. These positions are susceptible to a “short squeeze,” a sudden upward move, which could benefit bitcoin and the crypto market. QCP Capital said:

6/ 3. Extreme short positioning in stocks will keep markets supported and sensitive to short cuts

After the FOMC (Federal Market Open Committee, last Thursday), the immediate market reaction was a price rally and a flight sell. BTC reached a high of 24,666 and ETH a high of 1,793. In terms of volumes, BTC fell to less than 70% (from almost 90%) and ETH to 90% (from 125 %).

Can Bitcoin and Ethereum overcome mid-term hurdles?

As there is potential for bullish momentum, the bears could resume their attacks if the Fed becomes more aggressive with its monetary policy. QCP Capital noted that there were “a lot” of Fed officials disagreeing with current market expectations.

Market participants tried to get ahead of the Fed by anticipating its future interest rate hikes. That’s why some Fed members might want to get more belligerent and surprise the market with a bigger hike, reduce demand and perhaps have a deeper impact on lowering inflation. QCP Capital said:

We continue to believe that markets will afford sideways and will be sensitive to economic data releases. Next Wednesday’s US CPI will be the next big thing to watch.

The trading firm believes the upcoming Ethereum “merger” is the biggest obstacle to future appreciation. This event could pave the way for the emergence of ETH fork tokens.

If one of these tokens, proof-of-work (PoW)-based ETH, is able to retain the market share of proof-of-stake-based ETH, the token could experience a “significant disruption in the market”. price similar to a stock split or a special dividend”.

Be vigilant and consult your financial adviser before making any investment decision. Mirror-Mag cannot be held responsible in the event of bad investments. Before using any third-party service, you should do your own research.

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