Are the recent increases a bull trap? What's next for BTC?
Bitcoin value has recently increased by almost $ 2,900, thus returning to the upper limit observed since mid-September of this year's consolidation. However, there are many indications that this increase is only a bull's trap and will not turn into a bigger bull market. There are more and more arguments for the upcoming sale on the cryptocurrency market.
The catalyst for higher volatility may be the Federal Committee for Open Market Operations (FOMC) meeting scheduled for next Wednesday, i.e. November 2nd.
Given the positive data from the US economy, it seems highly probable that the Fed will raise interest rates for the fourth time in a row by 75 basis points in November and will announce further decisive action.
It is worth recalling that the Nonfarm Payrolls report published on October 7th shows that the change in employment in the American non-agricultural sector in September amounted to as much as 263,000 instead of the expected 250,000. It also made US unemployment unexpectedly drop to 3.5% from 3.7%.
Moreover, the dynamics of economic growth (GDP) in the third quarter of this year amounted to. as much as 2.6%, increasing from -0.6% in the second quarter of this year.
The above data shows how strong the US economy is, which means that the Fed does not have to worry about its condition and can focus on fighting inflation.
The price growth dynamics was in September this year at 8.2%, which means only a symbolic decrease from 8.3% in August this year. At the same time, core inflation increased to 6.6% from the 6.3% reported in August this year.
All this speaks for further aggressive tightening of monetary policy, which may ultimately contribute to the renewed depreciation of BTC.
The assumptions of classic technical analysis also support this scenario. Consolidation, i.e. the formation that we have been observing on Bitcoin's quotations for over six weeks, is perceived as a correction system from which the market breaks more often in the direction consistent with the earlier move. So, if, in this case, we had previously seen declines, statistically, there is a greater probability that BTC will fall below $ 18,500, which in turn could drive further depreciation.
Ethereum's prices have increased by almost 40 per cent in recent days. This surge contributed to the breakdown of the resistance zone between USD 1,380-1425, which could naturally drive a further appreciation towards another resistance located in the region of USD 1,780.
However, there are many indications that the Fed's monetary decision will be crucial for the near future of ETH. Suppose the tone of the statement after the November meeting and the tone of President Powell's speech at the last press conference proves to be hawkish and indicates a further motivation of the Board of Governors to curb inflation. In that case, the rate of this cryptocurrency could immediately slide to the region of USD 1,400 or further fall to the region of USD 1,250 or even $ 1,000.
Bitcoin Cash (BCH)
Bitcoin Cash has recently increased by more than 18%, overcoming the technical resistance of $ 112 and approaching another in the region of $ 122.
The small dynamics of this increase may suggest, however, that it is only a form of a correction in a long-lasting downward trend, which means that after this rebound ends, the BCH exchange rate may return to the downward path, even slipping towards the June and July lows, i.e. up to $ 97.
Litecoin's prices have recently increased by 19%, returning above the rising trend line, broken in October's first half. This line is being tested again from the top (as support), meaning its rejection could fuel a further upward rally towards $ 64.50.
However, the potentially negative impact of the Fed's monetary decision on the cryptocurrency market cannot be underestimated here, which means that the potential increases will probably only be temporary. After their completion, the cryptocurrency rate will again slide to $ 50.
Solana's quotations have increased by 27% over the past few days, breaking the downward trend. This increase meant that we are now seeing a test of another resistance of $ 34. If this barrier is broken, the price of this cryptocurrency could move further north towards $ 37.50.
However, there are many indications that this rebound will turn out to be only a form of a temporary correction, after which the market will return to the path of declines, and the SOL exchange rate will slide down to around USD 26.
We could also expect potential declines in the Polygon cryptocurrency quotes soon. The MATIC course has increased since the second half of September this year by over 40%, thus reaching the region of technical resistance of $ 0.96.
Even if this barrier is broken, later increases will not be stopped and are already treading another resistance of $ 1.03. It is one of the essential zones, tested for the first time in May 2021.
This also means that the potential for a possible further increase turns out to be quite limited, and in the event of a renewed supply pressure, the MATIC rate could slide down to USD 0.70 or even further to USD 0.61.
Looking at the Avalanche price, we can see that after rebounding from the technical support of $ 14.50, the price of this cryptocurrency has already increased by almost 33%, beating technical resistance of $ 16.50 and $ 18. If this rise continues, we could expect another resistance to be re-tested around $ 22 soon.
However, one cannot forget the risk of more supply pressure on Wednesday after the FOMC meeting and monetary decision.
In turn, the current situation on the XRP quotes looks more and more pro-declining. After falling from almost $ 0.55, the price of this cryptocurrency is stuck in a relatively narrow range between the support in the region of $ 0.4450 and the resistance of $ 0.4750.
Due to the low dynamics, this rebound resembles only a temporary correction, after which the XRP rate may return to the downward path. Its drop below $ 0.4450 could, in turn, drive a further depreciation towards $ 0.39 or even $ 0.30.
Looking at the EOS quotes, we will notice that the price of this cryptocurrency has increased by almost 24% over the past few days, thus returning to the area of previously defeated support (now resistance) of $ 1.15.
However, the small dynamics of this rebound may indicate that it is only a temporary correction, after which the price of this cryptocurrency will return to the downward path. If that happens, it could fall as low as $ 1.00 and down to $ 0.88.
Cardano's quotations have recently increased by over 33%, thus returning to the area of the previously defeated upward trend line, which was the lower boundary of the earlier isosceles triangle, from which the cryptocurrency's price was already at the beginning of October this year knocked down.
If the Cardado exchange rate rebounds from the resistance currently tested soon, we could expect it to depreciate again to around USD 0.33 or lower.