Bitcoin "set a bull trap for investors" and will return to declines
By Noemi Jansana / Alejandra Zamora
Date: Thursday 19 May 2022
(Sharecast News) - Risk aversion hits the stock markets that suffered significant sales once again on Wednesday, after the statements of the president of the Federal Reserve (Fed), Jerome Powell, showing his determination to curb inflation. Wall Street took a hard hit with a 4% drop for the Nasdaq - as it lost its $12,100 support, which has impacted Bitcoin and cryptocurrencies, whose evolution in the markets goes hand in hand with the New York Stock Exchange. However, these assets have withstood the bearish pull, which entails serious risks according to experts.
Satoshi Nakamoto's creation is again below $30,000, "and that may make some people a little nervous," noted Craig Erlam, an analyst at Oanda. He believes that "it is difficult for risk assets to take significant advantage of the rally in the current environment". However, for some this is encouraging as "we haven't seen a sharp reaction to the move below such a key level." "Of course, that could change quickly, as below seems to offer the path of least resistance," with a control zone at $25,000 - $26,500 and, below that, $20,000.
Overall, activity in the digital currencies market continued to slow and saw lower volatility than the monthly average on Wednesday, Rabobank experts commented. Total capitalization is lower than in previous days and settles around $1.4 billion. As for other tokens, Ethereum has abandoned the $2,000 level.
In this context, there is no shortage of warnings from analysts who believe that the digital asset is simply waiting to start its next bloodletting. Popular Bitcoin critic Peter Schiff called this a classic bull trap for investors. In one of his recent Twitter posts, Schiff mentioned the following:
"I must admit that I'm surprised that #Bitcoin has held up this well. But don't get cocky #HODLers. The market never gives investors this much time to buy the bottom. It's more likely this is a bull trap to lure in as many more buyers as possible before the next major leg down."
He continued by stating: "Rising #food and gasoline prices will put more pressure on Bitcoin prices. That's because groceries and gas stations won't trade their food or fuel for Bitcoins. So if Bitcoin #HODLers want to eat and drive they will soon be forced to sell their precious 'stashes' in order to afford it." This will ultimately mean that Bitcoin could plummet even below $20,000.
According to César Nuez, analyst at Bolsamanía, the charts point to a bleak outlook. "The double twist drawn in the vicinity of $64,000 could be giving us the shape of a double top. This formation has frightening consequences for the coming months, and the downside target of the figure could be as low as $8,000."
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