Bitcoin Surge to $30k Tested as New Support Amid Fear of Macro Comedown

In the Brief:

  • BTC tests $30k as new support, hitting ten-month highs
  • Short squeeze, double top formation invalidation, and Binance order book composition suggest continued rise
  • Apprehension due to macro catalysts and decade-high S&P shorts in mixed market
  • Risk of volatility with CPI print, but BTC trades north of $30k and correlation with equities cooled down

4 - 7 minute read

Bitcoin, also known as BTC, is currently testing $30,000 as a new support. The cryptocurrency has hit new ten-month highs and some experts believe that it could continue to rise. However, other market participants are wary of a potential correction to $25,000, or even lower. This article explores the implications of recent market developments and discusses what traders can expect in the coming weeks.

The recent surge in BTC has been caused by several factors. A short squeeze that had been developing for several weeks finally pushed BTC over the $30,000 mark. This move has been perceived in different ways, with some market participants expressing major misgivings. Despite these concerns, there is optimism that BTC will continue its bullish momentum.

According to Rekt Capital, popular trader and analyst, Bitcoin has invalidated a bearish double top formation from Q1. This has cemented the belief of many traders who believe that BTC will continue to rise. To continue being bullish, several conditions need to be met on daily timeframes. For BTC to continue being bullish beyond its current point, its price needs to close daily above the higher high, and dip to turn it into new support.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Analyzing the composition of the Binance order book, Material Indicators suggests that the odds of upward momentum remain good. BTC liquidity is diffused in both directions, and there are no massive buy/sell walls. The so-called walls that appear on FireCharts are thin. Bullish momentum is growing, which may push BTC higher.

BTC/USD annotated chart. Source: Rekt Capital/ Twitter

The general mood of the market is mixed, with apprehension growing due to macro catalysts waiting in the wings for the rest of the week. The United States Consumer Price Index (CPI) print for March will be released on April 12. Producer Price Inflation (PPI) will follow a day later. With both events being known to induce risk asset volatility, Material Indicators acknowledged that an “explosive move” may result for Bitcoin this time around. If the numbers are hot, there is an expectation of a correction.

Markets commentator Holger Zschaepitz flagged the highest levels of shorting in the S&P 500 since 2011 ahead of the CPI release. Hedge funds increased their S&P shorts to a decade-high before CPI and earnings, with net short positions not seen since 2011. Goldman’s clients also cut tech longs at the fastest pace in 15 months.

The correlation in volatility between Bitcoin and equities has cooled down significantly. According to analytics account Tedtalksmacro, traders are likely to risk-off into the event of CPI due to the risk that a hot print forces market-wide repricing. Nonetheless, despite these risks, BTC is currently trading north of $30k.

The Bottom Line

BTC has been performing well lately, but there are also risks involved. Upcoming macro catalysts could induce risk asset volatility, causing a correction in the market. Traders should remain vigilant and take precautions to minimize losses in such scenarios.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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