Bitcoin price, the forces that influence it

Bitget’s BTC / USDT quote, chart by TradingView

1 – There was mixed sentiment in the market when the US Core CPI, PPI and Retail Sales data was released. This data mainly referred to the strength of the US dollar, caused by the CPI and lower than expected retail sales, which eased fears of high inflation in the United States. The US dollar index after the data was released was up 0.01% and 0.98% the next day.

June 2 – 24 and 25. Higher than expected basic durable goods orders, higher GDP and jobless claims. Rising US GDP gave the US dollar another purchasing power, while higher unemployment claims signaled restraint in purchasing power among consumers, US consumers are keeping their spending limits and instead keeping the US dollar, which also signals the containment of rising inflation. The US dollar index rose 0.09% and 0.03% respectively.

3 – An important release has been made which is the CB Consumer Confidence which shows consumer confidence in current economic activities. Positive confidence supported another consecutive gain for the US dollar which was up 0.29% that day.

July 4-5-4, Independence Day, probably President Biden’s confident speech about the US economy and its recovery led to this rebound. Oil on the fire was poured when the Chinese central bank and Chinese authorities allegedly took action against all cryptocurrency-related transactions.

July 6 – 6-7-8, three consecutive days of important economic data from the United States. ISM Non-Manufacturing PMI, JOLTS Job Postings, FOMC Meeting Minutes, and Initial Unemployment Claims. Job postings and jobless claims were negative for employment statistics, but had a positive impact on the DXY among investors. FED policymakers have said that economic growth and its future forecasts support the decrease in asset purchases, the FED also said it should reduce the injection of money into the US economy to zero.

7 – From July 20 to July 31. Economic data from the United States began to show negative results for what the Fed called economic growth as jobless claims rose significantly. Adding fuel to the fire were legitimate claims against one of the Binance crypto exchanges that is constantly monitored by country watchdogs for its illegal operations.

It was a crackdown on the events that affected the price of Bitcoin, but what does a technical analyst see when analyzing the chart?

Bitget’s BTC / USDT quote, chart by TradingView

First, what a technical analyst sees is strong resistance at point 1, which is shown on the chart above, second is the overbought signal from the RSI indicator. This means that Bitcoin purchases have reached their peak and buyers will be looking to sell it for profit, and as Bitcoin derivatives are widely used in major US banks and other exchanges around the world, investors at large cap will consider opening shorts on BTC. (in derivatives, a trader can profit from buying and selling).

Once the price hits the support zone and the RSI hits its oversold zone, Bitcoin experiences a build-up, this is where investors and traders will look to fill their wallets with Bitcoin for profit later when the price will increase. However, general market sentiment, Chinese bans, Binance bans, and the growing strength of the US economy do not allow the price to test resistance again and grow further. Therefore, Bitcoin tests previous strong local resistance, tests support areas as resistance and comes back down.

Since derivatives were introduced by crypto exchanges and the CME, and Bitcoin futures trading was widespread in US and global banks, Bitcoin is now more volatile and more sensitive to global economic data. Large cap investors who put their funds into Bitcoin futures trading always keep track of US economic data and the volumes generated by derivatives trading have risen sharply and will outperform spot trading in the near future.

CME group data

Although it may appear that the trading volume on CME is low, in global markets the daily Bitcoin derivatives trading volume is over $ 55 billion.

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