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24.05.2023 10:57 AM
Bitcoin consolidation may end with a surge in volatility: whose side is the initiative on?

Global financial markets and leading instruments froze in anxious anticipation of a resolution to the U.S. debt situation. The S&P 500 index maintains its position near the $4,100 level, while Bitcoin and gold are moving within narrow ranges without any significant price movements.

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However, in the crypto market, there is a rule that states a period of calm is often followed by a period of increased volatility. Considering the macroeconomic situation, the resolution of the U.S. debt situation will be the main catalyst for strong price movements.

The market is optimistic

The U.S. Treasury has only $60 billion left, and if expenditures remain at the current level, there will be an $18 billion deficit in the U.S. budget by Friday. Republican House Speaker Kevin McCarthy stated that the recent dialogue with President Biden was the most productive.

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Many American analysts are also confident that the U.S. debt ceiling will be raised. Investors show their commitment to these forecasts, as evidenced by the stable positions of the S&P 500 index. The markets are also confident that the Federal Reserve will not raise the key interest rate in the near future. About 85% of analysts on the CME expect a summer pause in the regulator's policy.

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All these factors contribute to a local positive sentiment in the markets, which is sometimes reflected in the buying activity during the restorative movements within consolidation ranges. However, investors await a definitive resolution of the situation, resulting in low trading volumes in the crypto market.

Bull and bear parity on BTC

Price movements near the $27k level continue in the Bitcoin market. Buyers must not surrender this level, as it will lead to a direct decline to the $25k level. This is due to the lack of horizontal volumes in the $25k–$26.5k range.

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Despite the attempts by the bulls, bearish pressure remains strong, gradually leading us to a complex price situation. The BTC/USD daily chart is forming a "triangle" pattern with decreasing highs and increasing lows.

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In this situation, we saw an attempt by buyers to push the price above the $26.6k–$27.5k range. Although the bullish surge was unsuccessful, it is worth noting that the breakout attempt was accompanied by increased trading volumes. This indicates the presence of a buyer who is not in a hurry to join the game.

BTC/USD Analysis

Sellers' activity remains at a high level. Bears confidently absorbed the volumes of the green candle from May 23rd and continue to exert pressure on the price. As of 08:00 UTC, technical indicators confirm the presence of a bearish impulse. RSI and stochastic are declining below the 40 mark.

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In the short-term perspective, the final formation of the "bearish engulfing" pattern and closing the trading day below the $27k level will allow sellers to realize an impulse towards $25k. However, on the 4-hour timeframe, the first signs of buyer activity are already emerging, so the likelihood of implementing the bearish plan is questionable.

Conclusion

Bitcoin continues to move within a narrow range of $26.6k–$27.5k, where the lower boundary of the channel serves as the final defense for the $25k level. The market maintains a relative balance between sellers and buyers, but the level of volatility in the crypto market is expected to significantly increase in the near future.

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