Bitcoin closed the week in the green at $26,340, recovering from the $24,800 bottom in the previous plunge.
BTC Price Chart – 1 week | Source: TradingView
Macro factor
Strategists at global investment bank JPMorgan recently discussed the potential impact on the US dollar in the event that the Chinese economy overtakes the US as the world's largest economy . According to the Center for Economic and Business Research (CEBR), one of the UK's leading economic consulting firms, China is predicted to overtake the US as the world's largest economy by 2030. .
JPMorgan strategists explain that even if China's economy surpasses that of the US, the USD is unlikely to lose its status as the world's reserve currency immediately, citing historical experience as showing that any transition will be gradual.
“Although the United States overtook the United Kingdom as the world's largest economy in the late 19th century, the U.S. dollar is generally considered to have surpassed the British pound as the leading reserve currency. of the world only at the end of World War II”.
“Therefore, historical experience shows that if China overtook the US as the world's largest economy around 2030, dollar dominance could last even into the second half of the century. 21.
According to JPMorgan, China is the only country that can replace the US economy in the long term. However, global investment bank strategists believe this is unlikely due to the economic, technological, demographic and geographical advantages of the United States. Moreover, the growth potential of China's yuan depends on China loosening capital controls.
However, JPMorgan strategists reiterated the possibility of gradual de-dollarization , saying that the process could be accelerated by either a decrease in confidence in the US dollar or positive developments outside the US. States help increase the credibility of an alternative currency. A potential alternative to the USD is the BRICS common currency proposed by the nations of Brazil, Russia, India, China and South Africa.
Some believe that the Chinese yuan will replace the USD as the world's reserve currency. For example, the president of Russia's second-largest bank expects the yuan to replace the dollar as the world's main reserve and settlement currency "as early as the next decade."
Bitcoin and Altcoins
The correlation between Bitcoin (BTC) and the S&P 500 turned negative in May. Growing hostility from regulators in the United States contributed to the recent decline in the market-leading asset.
Several arguments are made that Bitcoin has shown some signs of recovery. However, the analysis of the price action shows that the trend is still in favor of the sellers. On the other hand, if the market breaks out of $28,000, it could signal an uptrend.
Source: TradingView
Bitcoin's market structure on the daily timeframe is bearish. The structure changed on April 21 when BTC dropped below its recent higher low. Since then, the price has tended to move lower.
Furthermore, trading volume has been extremely low since April, compared to the volume in February and March. This is also reflected in the OBV index, which saw a slight decrease in May, as opposed to the strong increase that was seen in the OBV index. it recorded mid-March.
Fibonacci levels based on the recent drop suggest that Bitcoin is likely to return to $24,800. The 61.8% extension at $23,300 is also the next target. Price action suggests that the $24,200 – $24,400 area can act as a strong support. Below that, the $22,400 and $21,500 levels are very important areas.
To signal a bullish change in structure, Bitcoin must rebound above the recent lower high at $27,400. However, an uptrend will not be established there, as BTC will need to form higher lows. Cautious investors can wait for this event before entering to buy.
Source: Santiment
Inactive circulation saw a spike on May 7, with the most recent on June 15, when BTC dropped to $24,800. The number of active addresses has also increased over the past two weeks.
The supply on exchanges is dwindling as users move funds to self-custodial wallets out of fear. The balance of capital flows on the exchanges also showed more money outflows than inflows in the past few days.
On the altcoin side, despite recording a rebound since last week's sell-off, in the short term, most of the projects in the top 100 are showing slight declines.
Projects such as KuCoin Token (KCS), Injective (INJ), Render Token (RNDR), Quant (QNT), Pepe (PEPE), Lido DAO (LDO), Fantom (FTM), Sui (SUI), BitTorrent (BTT) ), Mask Network (MASK)… lost 3-8% of the value of the day.
Source: Coinmarketcap
Meanwhile, despite recording a rebound from the local bottom at $1,626, Ethereum (ETH) still recorded 3 consecutive weeks of closing in the red. Currently, the asset with the second largest market capitalization is trading around $1,720, down slightly by 0.2% over the past 24 hours.
ETH price chart – 1 week | Source: TradingView
