The price of bitcoin has risen to $32.3K, but three factors may limit its recovery
Bitcoin bulls pushed the price up to $33,300, but significant headwinds in traditional markets could keep the price down.
Since May 27, the price of Bitcoin (BTC) has been surprisingly bullish. Weekends, particularly holiday weekends, are notoriously volatile and indecisive, with major price swings commonplace. Bearish price action is common even in bull markets, but BTC defied the trend.
Between May 27 and May 30, bitcoin rallied nearly 11%, breaking through the crucial $28,600 level to return above $30,000 at $31,700. The weekly close was the highest in twenty days, giving bulls their best three-day run in more than two months. Macroeconomic concerns, on the other hand, may limit any further upside potential.
Fears of a global food shortage are growing as commodity prices rise
The world’s food supply is a major, but often overlooked, factor in Bitcoin’s future price potential. Governments all over the world have shut down their seaports and airports since the COV-19 pandemic began, effectively cutting off and interrupting the flow of goods. It will take years for things to get back to normal after this disruption, but that isn’t the main cause for concern.
Fertilizer prices have risen dramatically in the United States over the last 18 months. The Fertilizer Price Index was $78.83 in January 2021 and is now $254.97, an increase of nearly +225 percent. This market is likely to be further disrupted by a combination of supply chain disruptions and ongoing shortages.
Individual commodity prices continue to rise, and they are a major contributor to inflation’s steady rise. Wheat (CBOT: ZW) in particular reached new all-time highs in February 2022 and continues to trade near those levels. Wheat futures have risen by as much as 76 percent and as much as 143 percent in the last 18 months, just in 2022.
Oil futures (NYMEX: CL) are still rising and are now at levels not seen since July 2008. Traders and investors are concerned that once China’s COVID shutdown is lifted, oil prices will rise to $150 per barrel. When that happens, demand will almost certainly rebound, putting more pressure on oil.
Concerns about the stock market’s growth
The global equity markets are still under a lot of pressure. Inflationary pressures, rising commodity prices, supply chain disruptions, and the Ukraine conflict have put risk-taking investors and traders on the defensive.
This week will see a number of high-impact economic events, which will likely put a halt to any major price movement in equities and cryptocurrencies. On June 1, the European Union’s unemployment data, as well as the Bank of Japan’s interest rate decision and manufacturing data, will be released. On June 3, the US unemployment rate and non-farm payroll data will be released. To cap off a busy week, three former members of the US Federal Reserve are scheduled to speak on June 3: John Williams and James Bullard on June 1, and Lael Brainard on June 3.
Bitcoin’s recovery could be limited to $37,000 due to technical factors
Bitcoin is coming off a new weekly loss record of nine weeks in a row. Buyers have returned since the start of the current weekly candlestick, pushing BTC above the entire trading range of the previous two weeks and well above the 50 percent range of the flash crash on May 9, 2022.
If Bitcoin can close above the daily Kijun-Sen at or above $31,350, it will have a clear path to the $37,000 value area. Furthermore, the volume profile for 2022 is very thin, ranging between $32,000 and $37,000. However, the bulls may face sellers once more at $37,000.
Bulls will need to push Bitcoin price to a daily close near $44,000 to send a message to the market that a new uptrend is about to begin. In that case, BTC would set off a “ideal bullish Ichimoku breakout,” providing bulls with the path to retest the all-time high.
At the very least, a temporary reversal is likely to occur while stock prices remain in bear market territory and commodities remain at all-time highs. If the old technical analysis adage “volume precedes price” holds true, traders should expect food and oil prices to fall, while stocks and Bitcoin prices will rise.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.