Despite this, the analyst remains bullish on the asset long-term.
Bloomberg Intelligence Senior Macro Strategist Mike McGlone has cautioned that Bitcoin’s latest bounce to resistance at $25k may favor what he describes as “tactical shorts.”
McGlone expressed this in a tweet today, noting that the asset was battling the Fed’s tightening policy and has ventured into previously unexplored economic territory. As highlighted by the analyst, for the first time in its history, the asset’s 50-week moving average has crossed below the 200-week moving average. However, despite this, the analyst reveals that he maintains a long-term bullish outlook on Bitcoin.
Hollow Rally or Enduring Recovery? Bitcoin $25,000 vs. the Fed – #Cryptos have never faced a US recession, #Fed tightening and the #Bitcoin 50-week moving average below the 200-wk. My long-term bias is quite bullish, but the 1Q bounce to good resistance may favor tactical shorts pic.twitter.com/7bgmwf1D5A
— Mike McGlone (@mikemcglone11) February 21, 2023
It is worth noting that investors still perceive Bitcoin as a risk asset. Consequently, the market remains susceptible to reactions from Fed tightening policies which could make investors risk-averse. In a note attached to his tweet, McGlone taps the $25k price point as a significant level for Bitcoin. According to the analyst, if the asset can hold above it, it will represent a market rebound for crypto and other equity markets.
Recall that the crypto markets rallied as the Fed raised borrowing rates by an expected 0.25% at the beginning of the month. Notably, all eyes will be on the Federal Open Market Committee minutes scheduled for release tomorrow. The markets could react negatively or positively depending on how close the Fed was to a 0.5% rate hike decision.
The rate currently sits at about 4.75%. However, Fed officials have maintained that raising the benchmark above 5% will be necessary to bring inflation down to 2%. No doubt the apex bank has been encouraged by strong employment numbers dispelling immediate recession fears.
Meanwhile, the Bloomberg analyst is not alone in his view that Bitcoin will likely see a price decline in the short term. Seasoned pseudonymous technical analyst Duo Nine recently indicated that the asset had formed an ascending triangle chart pattern. While technical analysts generally view this as a continuation pattern, the direction of the price is often dictated by the direction of the breakout. The price appears to be breaking below support, signaling a potential price decline.
I did my best to redraw the #Bitcoin chart.
Still came out short. 🤣#BTC #BTCUSD pic.twitter.com/su8JAoRJhe
— Duo Nine ⚡ discord.gg/ycc (@DU09BTC) February 21, 2023
Fellow prominent crypto price chartist Ali Martinez noted today that traders are skeptical. Martinez revealed that approximately 53.54% of open Binance positions are short.
Traders appear to be approaching $BTC with skepticism!
~53.54% of all accounts on #Binance with an open #Bitcoin position are going short. pic.twitter.com/m51cQ5xbGI
— Ali (@ali_charts) February 21, 2023
Nonetheless, the analyst asserted last Friday that the asset has strong support between $21,700 and $23,700, where 1.60 million addresses bought over 1.32 million Bitcoin per IntoTheBlock data.
Nothing to worry about yet!@intotheblock's IOMAP shows that #Bitcoin built a vital support barrier between $21,700 and $23,700, where 1.60 million addresses bought over 1.32 million $BTC.
If this demand wall can hold #BTC, notice that the next key resistance sits at $27,000. pic.twitter.com/VWCap8RxaI
— Ali (@ali_charts) February 17, 2023
Recall that the asset rallied as much as 12% last Thursday, buoyed by positive price action and sentiment on Binance’s legal worries in the United States. At press time, it is trading for $24,531.58, down 1.66% in the last 24 hours.