Summary:
Bitcoin has had an eventful 24 hours, having broken the $22k resistance level after the weekly close and looking to reclaim the all-important 200-weekly moving average at the $22,500 price level.
The latter weekly moving average has previously marked bear market bottoms, and Bitcoin flipping it from resistance to support would be monumental in turning crypto-trader sentiment from one of fear to optimism.
A brief look at the daily BTC/USDT chart below reveals that Bitcoin remains in bearish territory, trading below the 200-week (red), 50-day (white), 100-day (yellow), and 200-day (green) moving averages. BTC is currently battling the 200-week moving average and 50-day moving average as resistance levels.
Successful reclamation of the latter two MA’s could signal additional new growth to the 100-day moving average around the $28k price area.
Bitcoin’s fortunes turning for the better in the crypto markets come less than one week after the United States’ inflation hit a 40-year high of 9.1%. In addition, New Zealand just announced record-breaking inflation of 7.3% marking its highest level in 32 years.
Furthermore, the EU, United Kingdom, Canada, and Japan are also expected to release their annual inflation data this week. Given the inflation data from the US and New Zealand, it is highly probable that they too will post record-breaking yearly inflation.
With the above information and events, one can quickly conclude that Bitcoin posting gains amidst record-breaking CPI data could mean that investors are finally warming up to BTC as a hedge against inflation.
However, the CEO of CryptoQuant, Ki Young Ju, identified last week that a Bitcoin short-squeeze could be in the pipeline given the tendency of late shorter to become increasingly confident as BTC loses value. He shared his analysis of the short squeeze through the two-part Twitter thread below.
Therefore, caution is advised going long on Bitcoin, given that the current price action is potentially a short squeeze. BTC’s correlation to global macro-economic events could resume soon after, and bearish sentiment could return.