Since May 27, Bitcoin (BTC), has seen a surprising bullish price movement. Weekends, particularly holiday weekends, can be volatile and unpredictable. Major whipsaws in price movements are a common occurrence. Bearish price action is a common theme even in bull markets. However, BTC has bucked that trend.
Daily chart of BTC/USD (Coinbase). Source: TradingView
Bitcoin rose nearly 11% between May 27, and 30, crossing the $28,600 threshold to return above $30,000 to $31,700. Bulls enjoyed the strongest three-day run for over two months, with the weekly close being the highest of the last twenty days. However, macroeconomic worries could limit any upside potential.
Global food shortage fears mount at commodities prices rise
Bitcoin’s future value potential is dependent on the global food supply. This is a key, but often overlooked, factor. The COV-19 pandemic has seen governments around the world shut down their airports and seaports, effectively preventing the flow of goods. Although it will take many years for normality to return, this disruption is not the main cause of concern.
The United States has seen fertilizer prices rise exponentially in the last 18 months. The Fertilizer Price Indice was $78.83 in January 2021 and currently stands at $254.97. This is an increase of nearly +225%. This market will continue to be disrupted by a combination of continued shortages and supply chain disruptions.
Index of fertilizer prices Source: ycharts.com
The inflation rate is primarily driven by the rise in commodity prices. CBOT: ZW, the main commodity that rose in inflation was wheat. It reached new all-time records in February 2022. Wheat futures have risen by 76% in 2022 and more than 143% over the past 18 month.
Weekly chart of wheat futures (ZW), Source: TradingView
Oil futures (NYMEX CL: oil) are continuing to rise. They are trading at levels they have not seen since July 2008. Traders and investors are concerned that oil could spike to $150 per barrel if China closes its COVID shut down. If that happens, oil demand will increase and have a greater impact on the market.
Crude oil futures (NYMEX). Source: TradingView
Stock market growth concerns
Global equity markets continue to be under significant pressure. Rising inflation, rising commodity costs, disruptions in supply chains, and the conflict at Ukraine have all put traders and investors on alert.
This week is packed with high-impact economic events that will likely stop any major price movements in equities or cryptocurrencies. On June 1, the European Union’s unemployment data will be released, along with data from the Bank of Japan regarding its interest rate decision as well as manufacturing data. On June 3, the U.S. will release its unemployment data and non-farm payroll statistics.
Three former residents of the U.S. Federal Reserve will speak on June 3: John Williams and James Bullard, Lael Brainard, talk on June 1.
Bitcoin’s recovery may be limited by technical issues.
Bitcoin has just recovered from a historic nine-week streak of losses. The current weekly candlestick has seen buyers return and push BTC well beyond the trading ranges of the past two week and the 50% range that was the flash crash of May 9, 2022.
Bitcoin’s price should close above the daily Kijun Sen at or above $31,350. This will allow BTC to reach the $37,000 area. The 2022 volume profile, which is between $32,000 to $37,000, is also very thin. However, the bulls may face sellers once again at $37,000
BTC/USD daily Ichimoku Kinko Hyo chart. Source: TradingView
Bulls will need to push Bitcoin to a daily high of $44,000 if they want to signal to the market that a new trend is beginning. BTC would then trigger an “ideal bullish Ichimoku” breakout, giving bulls the opportunity to retest their all-time high.
Stock prices are still in bear market territory, and commodities are at all-time highs. However, it is possible for a temporary reversal to occur. The old technical analysis saying, “volume precedes the price” should be repeated. This means that traders will see food commodities and oil selling off while stocks and Bitcoin are rising.
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