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Bitcoin price continues to trade in a narrow range between the mid-range around $18,000 and $19,500. The cryptocurrency is moving sideways after a rejection from the $20,000 level, which has led to a spike in fear and uncertainty in the nascent sector.
At the time of writing, Bitcoin price is trading at $19,100 with a gain of 2% in the past 24 hours and a loss of 1% in the past week. Bearish sentiment and fear in the crypto market point to a possible rebound that could coincide with macro forces affecting global markets.
Bitcoin price forms a bottom…for now
After the US Federal Reserve (Fed) announced another rate hike last week, Bitcoin price has been dominated by selling pressure. Bears managed to push the cryptocurrency close to its multi-year low at $18,000.
These levels have acted as critical support as BTC’s price trends move downward from a record high of $69,000. As selling pressure gained momentum, Bitcoin remained around these critical levels.
Analyst Justin Bennett believes that the price of BTC is once again creating a price action that was shown in early 2022. At that point, Bitcoin price recovered from a massive crash and formed a channel between $37,500 and $49,500.
The cryptocurrency traded sideways within this pattern for several months only to be pushed downward by macroeconomic developments. This led to another massive crash in May 2022.
Bennett believes Bitcoin price could form a similar channel since late June with a potential of $27,500 as critical resistance. As seen below, the analyst believes BTC has hit the bottom of the pattern and may be willing to retest the highs at around $26,000 before crashing below $18,000.
The analyst wrote: “Same structure for $BTC as February-April, only missing a $26,000 retest”.
Macroeconomics Ready to Support a Bitcoin Price Relief Rally
Additional data from Tom Dunleavy, senior analyst for Messari, suggests the crypto market could benefit from a rebound in traditional markets. As the Fed raises interest rates, risky assets, such as Bitcoin and stocks, show a high correlation.
(1/5) There could be another rough week to come, but everyone always says there will be a bottom when we hit the peak of bearishness.
Are we almost there?
Some interesting data points: In futures positioning, wide margin leveraged accounts are more short than they have been in a year pic.twitter.com/VsXwFHj6na
— Dunleavy (@dunleavy89) September 26, 2022
At the time of writing, bearish sentiment in the financial markets appears to be reaching levels last seen in 2020, during the onset of the COVID-19 pandemic. This is usually an indicator of a market bottom and possible relief as short positions pile up in the market.
According to Dunleavy, the Put/Call ratio (P, a metric used to measure the number of call (buy) option contracts versus put (sell) option contracts, reaches a level of 1. This can be translated into high bearish sentiment in global markets.
The last time the Put/Call ratio was at its current level, Bitcoin price and crypto markets went into a multi-year bull run and the price trend hit an all-time high. While the current macroeconomic scenario could limit any bullish price action, momentum could be strong enough to reach $26,000 as Bennett suggested.