According to the trader known as Pentoshi, the price of Bitcoin (BTC) is expected to face turmoil as interest rates rise in the United States. However, the market will digest this increase and soon BTC and tech stocks will recover and rise again. Pentoshi is one of the most well-known and followed analysts in the market. In an analysis published on Monday (2), he indicated two paths for BTC. In the former, the rally would take the cryptocurrency back to $42,000. In the second, more negative, price should seek support at $35,000.
#SPX update: Just took out this years lows and that might mark a temporary bottom for now$BTC will be monitoring 39.7k for the bias point Above that = squeeze to 42k Staying agile, less sidelines from my end pic.twitter.com/yhUB9Ydmi4
— Pentoshi 🟠🐧 (@Pentosh1) May 2, 2022
Bitcoin in the wake of NASDAQ
As per Pentohi’s analysis, BTC is still highly correlated with US tech stocks. That is, assets like Apple, Netflix, PayPal and others. This correlation has deepened in recent weeks. This means that, in the market’s view, BTC is not a hedge asset, but a risk asset. Therefore, its price tends to emulate the performance of other assets in this segment. In fact, data from the TradingView platform shows that the correlation between BTC and the Nasdaq 100 is increasing.
“Many stocks have been at their lows since March 2020 – after the coronacrash. Spotify, Netflix, Zoom, Paypal and more. It is possible that there will be a bullish rally in BTC and equities after the FOMC decision, at least in the short term. Many assets are at important points of articulation that want to establish themselves”, says the analyst.
Another popular trader who goes by the name Light agrees with Pentohi’s prediction. In his view, the timing of the interest rate announcement will generate an asset purchase effect. That tends to happen even if the Fed surprises and doesn’t raise rates.
Movement expectations
Finally, Pentoshi looks at the key levels to watch for in BTC in the coming days. After the sharp dips in April, the BTC price is quoted at $39,075 at this point, with the next resistance at $39,700. If the price rises above this value, it will trigger a rally to $42,000.
“BTC will be tracking $39,700 for the point of bias. Above that = squeeze to $42,000.”
But if the price fails to break the resistance solidly, the April correction is likely to continue this month. In case of a dip, the price is expected to drop another 9% and seek support in the $35,600 region.
Super Wednesday
This Wednesday (4) the financial market will have another Super Wednesday. And no, it’s not because of Star Wars Day (May 4th), but because of interest rate decisions in the US. The US Federal Open Market Committee (FOMC) is meeting to set the country’s new benchmark interest rate. According to most analysts, the rate is expected to be increased by 50 basis points (0.5%). That is, the Federal Funds Rate (FFR) will be raised to 0.75% per year. The decision is awaited with great expectation, as it should generate different impacts. With the rise, the Fed hopes to control inflation in the US, which is already the highest since 1982. On the other hand, the increase should generate turmoil in the equity market, especially for cryptocurrencies. Read also: While ETH 2.0 does not arrive, investors suffer from GAS on Ethereum Read also: Coinbase withdraws from merger with Bitcoin Market owner, but launches Coinbase Brasil Read also: Bitcoin price may drop to $ 28,000 after aggressive increase of the Fed rate, analysts say