- Bitcoin has formed a double-top pattern on the daily chart.
- Focus shifts to the upcoming FOMC minutes.
- Bitcoin’s bearish breakout will spell trouble for altcoins.
Bitcoin and other altcoins continued their freefall on Wednesday as a somber mood dominated the financial market. BTC dropped back to $29,000 while popular altcoins like ApeCoin, Kava, Stacks, Zilliqa, and Pepe led the losses. All these tokens plunged by more than 10% as the crypto winter gained steam.
Fear and greed index eases
Cryptocurrencies were not the only assets in the red on Wednesday. American equities continued their freefall. The tech-heavy Nasdaq 100 index dropped by 20 basis points while the Dow Jones fell by over 100 points.
At the same time, the closely watched fear and greed index declined from over 80 earlier this month to the greed area of 65. These are signs that the greed among investors is easing.
The next key catalyst for Bitcoin and other altcoins will be the upcoming FOMC minutes, which will come out later on Friday. These minutes wil provide more information about the deliberations that happened in last month’s meeting.
In that meeting, the Fed decided to hike interest rates by 0.25%, pushing them to 5.50%, the highest level in over 22 years. In most periods, cryptocurrencies tend to underperform in periods when the Fed is hiking interest rates.
A lot has happened after that rate hike. For example, Fitch downgraded the American credit rating from triple A to AA+. At the same time, Moody’s downgraded some of the biggest banks in the US.
Meanwhile, data from the US showed that the American labor market was easing. In a report, the Bureau of Labor Statistics said that the US created 189k jobs in July after adding 209k in June.
Another report on Thursday showed that inflation was falling. Core inflation dropped from 4.8% in June to 4.7% in July. Excluding the housing market, inflation is falling at a quicker pace. Therefore, analysts believe that the Fed will pause its rate hikes and even cut them in Q1 of 2024.
Read more: How to buy Zilliqa.
Waiting for Bitcoin’s move
Most altcoins have plunged recently because of Bitcoin, which has remained at $29,000 for weeks. Therefore, the next move by altcoins will depend on how Bitcoin performs.
On the daily chart, we see that Bitcoin price formed a double-top pattern at ~$31,000 in April and July. Its neckline is at $24,842. In price action analysis, a double-top pattern is one of the most accurate bearish patterns in the market.
Now, Bitcoin has dropped below the 50-day moving average, signaling that bears are getting empowered. Therefore, there is a likelihood that Bitcoin will have a bearish breakout in the coming weeks. If this happens, the next stop will be the psychological level at $25,000, which is ~15% below the current level.
If this happens, altcoins like Zilliqa, Kava, Pepe, and Stacks will continue falling since they are more sensitive to Bitcoin price movements.
