Analysts predict that the macro decline will likely continue for the foreseeable future, despite traders' joy when BTC price surges 7% to $21,800.
Many cryptocurrency investors now have reasons for optimism after the market experienced favorable price movement on July 7 in addition to gains in the traditional market.
The market's positive day coincides with an uptick in jobless claims in the US, which may be a hint that "the pressure on wages may have finally peaked," according to Jamie Cox, managing partner of Harris Financial Group. Financial conditions could become "tight enough to allow the Fed to cut back on the amount of rate rises" if this trend persists, according to Cox.
After hovering around $20,400 for the bulk of the day on July 7, according to data from Cointelegraph Markets Pro and TradingView, the price of Bitcoin (BTC) surged by almost 7% in the afternoon to reach a daily high of $21,860.
Here are some possible future scenarios for Bitcoin as the crypto community tries to navigate the turbulent waters of the crypto winter in quest of a market bottom.
The trend remains negative
Many people are growing euphoric and bullish since we have repeatedly shown similar candle patterns over the past eight months, tweeted Twitter user "Roman," who shared the accompanying graphic.
Roman believes that this is simply the most recent in a string of fakeouts that will deceive many traders into thinking that the trend has bottomed out when in fact it has not.
“Volume decreasing in a range is consolidation for continuation of trend. Not to mention thousands of inflows to exchanges before each top.”
A recovery above $23,000 would be bullish
Anonymous Twitter user Gilberto, who provided the following chart and noted that Bitcoin's price recently broke out of a pennant shape, is another trader who believes the trend is still unmistakably negative.
“Bullish above $23K, for now daily trend is still downwards.”
Market researcher Crypto Tony published the following chart, which depicts a "worst-case scenario" in which BTC might bottom out near $12,000, to show what the prospective price path for Bitcoin could look like if it continues along the downward trend.
Crypto Tony said:
“I do not think we see the start of the next impulse until later next year and a new bull run peak until 2024 - 2025. I am already positioned at $22-24K and will add if we drop to $17 - 15K.”
Traders follow the 200-week moving average
The 200-week moving average (MA) is one of the most well-liked and frequently quoted indicators that traders use to spot attractive buying opportunities when it comes to measures that have been consistently employed to assist in identifying market bottoms.
Speculation about how long it will take for Bitcoin to climb back above this line and how much trading interest there will be has started to increase as it has fallen below its 200-week MA for just the fourth time in its history.
The current market capitalization of all cryptocurrencies is $957 billion, with Bitcoin having a dominance rate of 43.1%.