As Bitcoin (BTC) bulls fight hard to keep the New Year’s rally rolling, one expert is sounding the alarms.
So far, 2023 has seen the onset of a sensational recovery from the depths of December.
BTC has gained +31% YTD in price action that has reinvigorated markets. Many influencers on crypto Twitter have been quick to label it the end of crypto winter.
The warning bells come from none other than Mike McGlone – the ‘man behind the dashboard.’ A pundit known in recent years for mainstreaming Bitcoin in financial media.
McGlone is a former Head of Research and Strategy at ETF Securities turned Bloomberg’ Senior Macro Strategist.
Bitcoin (BTC) may be rolling over
Taking his thesis to Twitter, the top analyst presented his case that risk-assets aren’t out of the woods just yet.
Concerns surrounding the macro sentiment for risky assets such as crypto is at the heart of McGlone’s forecast, as he explained.
“The primary 1Q risk-asset options appear to be either bear-market bounce or bottoming,” said McGlone.
“Bitcoin may be rolling over – the benchmark crypto is backing away from resistance as the top headwinds remain”.
Indeed, February’s Bitcoin price action has been challenging. A retracement from stiff resistance at $24,000 saw the price tumble down to local support at $21,750.
However, while bulls attempt to consolidate gains here – things aren’t looking good. The chart structure is entering a dreaded head-and-shoulder pattern.
Could the Fed explain February Bitcoin resistance?
McGlone’s analysis suggests this price action is because of the ongoing pressure of headwinds from the US Federal reserve.
“Rising rate expectations as indicated by the Federal Futures Funds [in Q1] … but the main difference: markets are lower than last year.”
“Don’t fight the Fed,” he added.
Indeed, fears of rate hikes have engulfed the market since the end of 2021 – so far things have been steady.
Yet, markets so far in 2023 have been calmed by the surprising dovish sentiment out of Jerome Powell.
This has given a much-needed boost of confidence for Bitcoin, which has been encouraged by a bullish S&P 500.
What is clear is that, for now, Bitcoin is on a collision course with its 200-day MA. If it doesn’t bounce from support soon, things are going to be hairy.
One potential price mover could be today’s statistics published by the Fed. BTC markets sit poised and ready to trade on the CPI figures released at 13:30 UTC.
Markets are pricing in a YoY estimate of 6.2%, and a core YoY estimate of 5.5%.
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