Bitcoin bounces back after hitting 2-month low – Cryptocurrency News

On Wednesday, Bitcoin fell below $19,000 for the first time since June, pressured by a significant drop in equity markets and the greenback’s persistent strength. However, the king of cryptocurrencies quickly recovered above the psychological $20,000, without any major positive developments backing this rebound except for some minor weakness in the US dollar. Is the recent price movement indicating that Bitcoin is trading near its bottom or is there more pain ahead?

Macroeconomic picture deteriorates

After taking a hard beating during the past week, Bitcoin recouped some losses, reclaiming the crucial $20,000 mark. Nevertheless, traders do not seem to be altering their views on the crypto space’s prospects as the broader macro headwinds continue to multiply. Firstly, the ECB has now joined the camp of hawkish central banks after hiking interest rates by 75 basis points on Thursday, sending European bond yields higher and pushing European investors away from risky assets.

Moreover, Russia’s move to shut down Nord Stream 1 until all Western sanctions are lifted, acted as an additional unexpected headwind. Specifically, apart from fueling risk-off sentiment, which kept the famous Bitcoin Fear and Greed index into the ‘extreme fear’ territory, it also cast shadows on whether crypto miners would have the necessary energy supplies to power their operations during the winter. These negative developments came to add more pain to the battered crypto market, which has lost more than $2 trillion in capitalization, currently hovering below the $1 trillion mark.

All eyes on Ethereum merge

After years of delays, Ethereum’s largest upgrade since 2015 called ‘Merge’ is set to happen next week. This process will alter many functions in Ethereum’s network, which are expected to lead to a 99% reduction in energy consumption and a 90% cut in the coin’s issuance. Unsurprisingly, Ethereum’s price fluctuations ahead of the upcoming merge indicate that market participants seem to be extremely optimistic about its growth and sustainability prospects, with the major altcoin starting to threaten Bitcoin’s dominance in the crypto world.

As data from CoinMarketCap shows, the ETH/BTC ratio hit 0.08514 on Wednesday, which is the highest so far in the year. Moreover, Ether has outpaced bitcoin since both cryptocurrencies hit a 2022 low in June, while the market capitalization ratio of the two tokens has dropped to nearly 1.9x, from as high as 2.6x at the beginning of the year, which suggests that Ether is stealing market share from Bitcoin.

The most interesting fact though is that Bitcoin’s dominance fades in an era when economic conditions worsen. Usually, in such periods, investors tilt towards ‘value’ bets within each asset class. Hence, does that mean that Bitcoin has started to lose its shine?

Will Bitcoin’s rebound resume?

From a technical perspective, Bitcoin appears to be gaining some ground since the $19,000 mark rejected further declines. However, it’s too early to call for an uptrend as the king of cryptocurrencies has not yet jumped above any crucial technical levels.

If buying pressures intensify, the price could decline to test the 50-day simple moving average, currently at $22,035. Even higher, upside moves could stop at the recent high of $25,200.

On the flipside, bearish actions could propel the price towards the recent low of $18,750. Sliding beneath that floor, the spotlight would turn to the 2022 low of $17,588.