Macro bearishness continues to ferment, Bitcoin may weaken in the short term or test $26,000

Crypto markets retreated further on the back of UK inflation data, the latest FOMC meeting minutes, and the latest warning from US Treasury Secretary Yellen about the impasse over the US debt ceiling.

Written by: Mary Liu, BitpushNews

After nearly half a month of sluggish consolidation, the crypto market retreated further on the back of UK inflation data, the latest Federal Open Market Committee (FOMC) meeting minutes, and U.S. Treasury Secretary Janet Yellen's latest warning of the U.S. debt ceiling impasse . Bitweet terminal data shows that as of press time, the trading price of Bitcoin has fallen below $26,400, down about 3% in the past 24 hours, and is close to the lowest level since May 12.

Multiple Macro Uncertainties

Crypto markets tumbled earlier on Wednesday after the U.K.'s latest consumer price index (CPI) rose to 6.8% in April, beating expectations for 6.2% and hitting its highest point since 1992. The disappointing CPI meant that The Bank of England will have to continue with its recent policy of rate hikes, which usually hit the crypto market.

The latest Federal Open Market Committee (FOMC) meeting minutes showed that US central bank officials were divided on the issue of continuing to raise interest rates, which did not help boost market confidence.

On Wednesday, US House of Representatives Speaker Kevin McCarthy said debt ceiling talks were still pending -- eight days before the US faces the risk of defaulting. He also said he believed the negotiating team could make progress on Wednesday.

Since early May, as markets have been weighing U.S. government debt-ceiling negotiations and ongoing cryptocurrency regulatory and macroeconomic uncertainty, BTC has struggled with low volume and volatility, with trading prices remaining in the $26,500-$27,500 range.

Ruslan Lienkha, head of markets at fintech platform YouHodler, said in a blog post that "increased tensions in financial markets" have hit stocks and digital assets.

Lienkha wrote: "U.S. stock indexes are under selling pressure amid heightened fears of a possible U.S. default: the authorities are less than 10 days away from reaching some kind of agreement, and we have yet to see any progress in those talks. All this uncertainty is forcing financial Institutions are restructuring assets and preparing for a possible default, which puts additional pressure on participants in financial markets."

Enclave markets follow US stocks, Enclave Markets CEO David Wells told CNBC: "Although cryptocurrencies are a global market, trading volumes pick up sharply during US trading hours, so sometimes big crypto volatility is driven by macro-driven big stock volatility Happened afterwards."

Some analysts believe that even if the U.S. government can raise the debt ceiling before the June 1 deadline, risky assets such as stocks and cryptocurrencies may be affected because the issuance of new U.S. Treasury bonds will drain liquidity in the market.

Assets in U.S. money market funds, for example, hit a new record of $5.8 trillion this week as investors turned their attention to short-term debt securities, according to Reuters. Fixed-income mutual funds, a major source of corporate and municipal funding, have faced $615 billion in net inflows so far this year.

Deribit: Implied volume still at its lowest level

Luuk Strijers, Chief Commercial Officer of Deribit, an encrypted futures and options exchange, tweeted that $3.6 billion worth of Bitcoin and Ethereum options contracts will expire on Deribit this Friday, but as the market is in one of the lowest volatility levels of the year , so the impact is likely to be negligible.

With a put-to-put ratio of 0.38, outstanding calls may outnumber puts by more than two-and-a-half times, Strijers said. The amount of options expiring is sizable, but that doesn't mean the market has reason to panic.

He said: "Implied trading volume is still at the lowest level, the DVOL (Deribit Bitcoin Volatility Index) of Bitcoin and Ethereum is at 50, and the short-term trading volume is even lower, but it has climbed slightly. The same level, which is historically rare. We saw a similar minimum implied volatility (IV) situation in January of this year, followed by a huge spike.”

BTC 24-hour price chart hints at downtrend

The 24-hour price chart tracked by crypto analyst Ann Mugoiri shows that the bearish momentum is increasing, and the price of Bitcoin has fallen steadily. The bears managed to take control of the market, pushing BTC/USD to a low of $26,106.

Additionally, BTC's relative strength index (RSI) value of 37.79 and its recent drop below its signal line indicate that BTC is currently in a bearish market, a potential profit-making buying opportunity for investors looking to take advantage of current market conditions . The Bollinger Bands are also narrowing, indicating that volatility is declining and consolidating within a range. The upper band of the Bollinger Band is at the $28,886 mark and the lower band is at $25,908. The moving average indicator (MA) also showed a bearish sentiment as the 50-day MA crossed below the 100-day MA.

The 24-hour Bitcoin price analysis chart shows that Bitcoin is in a strong downtrend with bears dominating the market. BTC/USD has formed a series of lower highs and lower lows, indicating that selling pressure is intensifying. Ann Mugoiri believes that if it falls further, it may test the $26,000 level, the market continues to be in bearish control, and any signs of recovery are still a long way off.