Bitcoin is still trying to hold the price above the key support of $ 20,000 as US stocks start to rally after a sharp drop.
U.S. stocks rallied in a volatile session on Wednesday as investors struggled to regain their positions after the biggest drop in more than two years.
Closing the session, the Nasdaq Composite added 0.74% to 11,719 points, the S&P 500 gained 0.34% to 3,946 and the Dow Jones increased 30 points, or 0.1%, to 31,135.
Moderna is one of the biggest gainers of the Nasdaq Composite, gaining more than 6%. Share Tesla got 3.6% more and Apple increased 1%.
US stocks rose slightly after a massive sell-off on Tuesday (September 13), when the Dow Jones lost more than 1,200 points (or nearly 4%), while the S&P 500 lost 4.3% and lost 5.2%. This is the biggest drop of all 3 indexes since June 2020.
The market was on fire because of the August consumer price index CPI report in the US, showing a 0.1% increase in inflation month-on-month, despite a drop in gasoline prices.
The inflation report has raised questions about whether US stocks can return to June lows or fall further. It also raised concerns that the US Federal Reserve (Fed) could raise interest rates even higher than the 75 basis points that the market forecast.
On the same day, gold prices fell below the key level of $1,700 an ounce, as expectations of a sharp rate hike from the Fed took some of the aura of the non-yielding precious metal away.
Spot gold fell 0.36% to $1,695 an ounce, after marking its biggest one-day percentage drop since July 14 on Tuesday, boosted by a rebound in the dollar after US inflation rose unexpectedly. US gold futures prices fell 0.48% to $1,709.
Meanwhile, the Yen gained more than 1% against the US dollar on Wednesday after the Bank of Japan conducted a rate test in preparation for currency intervention, with the Japanese currency strengthening. stronger after US producer price data.
Bitcoin and Altcoins
The recent recovery of Bitcoin gave the majority of participants hope for a new bull market. However, after the US released the Consumer Price Index, it looked like it was all just another bull trap and the market could still fall deeper.
Bitcoin recovered from the $ 18,000 level and moved towards the $ 24,000 resistance level. However, the 50-day and 100-day moving averages, accompanied by the downtrend line, have stopped the uptrend. As a result, the price was rejected around the $ mark of 22,000 when BTC failed to break through these key dynamic resistance levels.
Currently, the market seems to be heading towards the $ 18,000 support level once again. If BTC below the $ 18,000 zone, the market could trigger another pullback, potentially dragging the price down to $ 15,000.
$ 20,000 is a very important psychological and technical level and it is currently providing the first line of defense for BTC.
On the 4-hour timeframe, for the past few days, the price broke through the $ 22,000 resistance, but failed to hold above it and quickly turned sharply lower.
The RSI is showing a possible reversal, with bearish divergence as prices make higher highs, but the momentum indicator is showing the opposite.
For now, the decline has paused at the $ 20,000 support. However, the market structure is still tilted to the downside, so BTC is still likely to fall below $ 20,000.
In this case, the $ 18,000 area could be tested again to determine if Bitcoin will make a new low.
One of the best tools to determine if Bitcoin is undervalued or overvalued is the Fair Value index. Current market prices tend to stay above fair value during bull markets and early bear markets.
In contrast, during the final capitulation phase of a bear market, market prices tend to fall below fair value for several months. During this period, many participants are losing money and tend to sell their coins to avoid further losses.
In previous cycles, the end of a bear market and the beginning of a long-term uptrend occurred when the market price crossed the fair value level, and this signal has occurred recently.
However, it is important to analyze other factors such as the macroeconomic and geopolitical state of the world, as well as market sentiment. futures, for a more precise analysis.
With Bitcoin still trying to hold above the $ 20,000 support, the market Altcoins There were also signs of recovery after a strong decline.
Many projects in the top 100 have rebounded slightly in the past 24 hours. Among them, the highlight is Celsius (CEL) when it recorded a spike of more than 28%.