The cryptocurrency market faced another volatile session on Saturday, with bitcoin retreating after a brief surge above $27,000 a day earlier.
Bitcoin Falls Back Below Key Level
After reaching as high as $27,092 on Friday, bitcoin was unable to maintain its push above the psychologically important $27,000 level. By Saturday morning, BTC had fallen back below $27,000 to trade around $26,850, down approximately 4% over the past week.
The recent volatility highlights the ongoing uncertainty hanging over the cryptocurrency market. Without a clear catalyst to drive prices higher, traders seem hesitant to push bitcoin significantly above $27,000. This level has acted as stiff resistance throughout 2022, limiting several rallies.
The Relative Strength Index (RSI) for BTC is currently holding just below 50 at around 46, indicating fairly neutral momentum. A push above 50 would likely coincide with bitcoin reclaiming the $27,000 level. For now, it appears rangebound between support around $26,500 and resistance at $27,000.
Ethereum Consolidates Above $1,500
Ethereum has seen similar price action recently, stuck trading in a relatively narrow range. After reaching as high as $1,571 on Friday, ETH pulled back marginally to trade around $1,545 on Saturday.
The second-largest cryptocurrency by market capitalization has found strong support around $1,535 over the past week. This level aligns closely with the 200-day moving average, which often acts as an important long-term indicator.
ETH’s RSI is currently weaker than bitcoin’s, holding around 37. The 10-day moving average is also trending down, reflecting the consolidation. A move above $1,600 would likely be needed to break the current malaise, which could be difficult given bitcoin’s hesitation.
For now, analysts expect this period of directionless trading to persist, absent a major catalyst in either direction.
Market Volatility Remains Elevated
While bitcoin and ethereum have stabilized somewhat after a volatile September, conditions remain fragile. The total crypto market capitalization stands around $1.15 trillion, nursing losses of nearly 60% for the year.
Heightened volatility is likely to persist as the macroeconomic environment evolves. Minutes released this week from the latest U.S. Federal Reserve meeting signaled that more interest rate hikes are likely in the coming months as the central bank tries to tame stubbornly high inflation.
Higher rates strengthen the U.S. dollar and depress risk asset prices. Many investors treat bitcoin and other cryptocurrencies as risk-on assets, hence their high correlation with tech stocks this year.
With consumer price inflation remaining well above the Fed’s 2% target, the central bank is poised to keep rates elevated for some time. This could make it difficult for cryptos to sustain meaningful upside momentum.
On the other hand, inflation shows some early signs of potentially peaking, which could give the Fed leeway to moderate rate hikes by early 2023. This kind of pivot would likely be bullish for bitcoin and the broader crypto space. However, the timing and degree of any policy change remains highly uncertain.
For cryptocurrency prices, volatility is likely to remain elevated in both directions until the macroeconomic picture clarifies. Many active crypto traders have recently favored stablecoin positions to reduce risk while awaiting the next big move.