Last week, the crypto market index dipped by 6.8% with BTC down by 9.16% as of this analysis.
This sell-off was not unconnected to the US Fed’s decision to keep the rate high after economic data released so far shows that the fight to bring down inflation (to a target of 2%) is far from over.
This statement triggered a massive sell-off that pulled BTC from a high of $22, 600 to reach last week’s low of $19. 849, before a slight, recovery to $20, 387.
Another headline that moved the market last week was the failure of Silicon Valley Bank to meet customers’ deposits which has raised another concern on whether the Fed will continue to raise the rate as some claim it may erode the value of bonds held by US banks.
The bank’s collapse triggered a bearish reversal on 2-year and 10-year yields with both instruments falling from a high of 5% and 4.01% respectively to 3 and 4-week lows of 4.57% and 3.67%.
Market forecast for the week:
The reversal of the 10-year yield to the downside, after a 5.2% dip last week, means investors are moving funds to the bond market which may lead to a further fall to 3.38%, hence bullish for Bitcoin and the overall crypto market.
I expect BTC to rally back to a near-term resistance of $21, 600 (its Feb 2023 support) if the treasury yield dips to 3.38%.
On the downside, I want to see a break below $19,560 to open the floodgate of another round of sell-off.