- Bitcoin price has been under pressure in the past few months.
- The VIX and DXY indices have rallied as market concerns rise.
- The closely-watched fear and greed index has slipped.
Bitcoin price came under intense pressure amid heightened bond rout, soaring volatility, and an extremely strong US dollar. BTC dropped below the support at $20,000 again on Wednesday as the fear and greed index remained in extreme territory. The BTC/GBP price also wavered as the British pound collapsed.
Soaring global risks
BTC price continued struggling on Wednesday as concerns about the Federal Reserve continued. Data published on Tuesday revealed that America’s consumer confidence rose for the second straight month in September.
Additional data revealed that new home sales rose by more than 20% in August. Therefore, there is a likelihood that the Fed will continue hiking interest rates in the coming months. Most analysts expect that the Fed will hike rates by 0.75% in October followed by 0.50% in its final meeting of the month.
Signs of a more hawkish Fed have led to a sharp deterioration of sentiment in the financial market. For example, the fear and greed index has crashed to 23, meaning that investors are extremely fearful. At the same time, the CBOE Volatility index (VIX) has risen to a multi-month high of $32.
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Meanwhile. American equities have continued falling while a bond sell-off has pushed bond yields to the highest point in years. All these factors explain why Bitcoin price has crashed in the past few days.
On-chain data shows that Bitcoin and other cryptocurrencies are struggling to attract demand. For example, the volume of cryptocurrencies traded in key exchanges like Binance and Uniswap has dropped sharply in the past few months. Similarly, the number of Bitcoin account holders has fallen while daily transactions have suffered.
Bitcoin price has also tumbled because of the strong US dollar index. The DXY, which tracks Bitcoin’s performance against the other currencies, soared to a two-decade high of $114.50.
Bitcoin price forecast
The daily chart shows that the BTC price has found a strong support at $18,306 where it has struggled moving below in the past few weeks. It has also formed what looks like an inverted cup and handle pattern, which is usually a bearish sign.
Bitcoin has also dropped below the 25-day and 50-day moving averages while the Awesome Oscillator has moved below the neutral line. Therefore, there is a likelihood that Bitcoin will soon have a bearish breakout as sellers target the key support at $17,000.
