Conditions are ripe for a Bitcoin range breakout, but traders fear that a deep correction is due.
Bitcoin (BTC) remained stuck inside a narrow range into May 20 as cryptocurrency markets shook off United States macro triggers.
Powell leaves market with “tons of uncertainty”
The pair had seen brief volatility after Jerome Powell, chair of the Federal Reserve, gave new commentary on policy and the outlook for inflation.
While leaving the door open for change should it be required, Powell’s language did not offer risk assets clear signals. Responding, the financial commentary resource, The Kobeissi Letter, warned that “tons of uncertainty” lay ahead.
SUMMARY OF POWELL SPEECH (5/19/23):
1. Inflation “far above 2% objective”
2. Committed to getting inflation to 2%
3. Unclear if rates are “sufficiently restrictive”
4. Failure to lower inflation prolongs pain
5. Will “take time” to lower inflation
Tons of uncertainty ahead.
— The Kobeissi Letter (@KobeissiLetter) May 19, 2023
Bitcoin soon forgot the event, returning to a range already familiar from the previous weekend.
Assessing the climate on exchanges, popular trader Skew argued that fresh volatility was only a matter of time.
“Growing variance between perp & spot market; which ive posted about previously,” he summarized in part of Twitter coverage on the day.
“Very tight illiquid range here between post friday FED speakers. Expecting market to find an EQ early next week in which both spot & perp market will be forced to establish a trend.”
A further post noted that the early signals were there for disrupting the status quo.
$BTC Binance Open Interest
Minimal price movement yet, positions flowing into the market again
Always precedes a liquidity hunt especially in this current environment pic.twitter.com/exvwCTcci6
— Skew Δ (@52kskew) May 20, 2023
Fellow trader Crypto Tony meanwhile forecasted that the range would stay in place until the start of the new macro trading week.
A close above or below the levels marked on an accompanying four-hour chart, he added, would form cause to reconsider the market.
I expect we will be in this range all weekend no doubt, bit we play the breakout if it does come today, tomorrow, next year …
Breakout plays are my favourite. We identify the range, set alerts and wait for the beast to break the cage ‼️ pic.twitter.com/1B7wB5uqCc
— Crypto Tony (@CryptoTony__) May 20, 2023
Caution over “big sell off” for Bitcoin
Others were bearish on the immediate future when it came to BTC price performance.
Popular analytics account IncomeSharks warned that a deeper correction was expected but should not materialize for another week.
“Expecting another week of chop before the big sell off,” part of Twitter commentary stated the day prior.
#Bitcoin – The red squiggles surprisingly accurate so far. Double rejection on the 4h supertrend. Expecting another week of chop before the big sell off. That’s when I’ll jump back in, when Twitter thinks we are going back to zero pic.twitter.com/hakZMRmdGU
— IncomeSharks (@IncomeSharks) May 19, 2023
Trading resource Stockmoney Lizards agreed, predicting that a breakdown was due while referencing the “head and shoulders” pattern discussed throughout trading circles in recent weeks.
“Correction in play,” it summarized, offering a target zone of around $24,500.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.