But such a reversal is in turn dependent on the macro economic backdrop. Friday’s strong US employment data was not ideal for risk appetite (good news is bad news). And investors will be keeping a watchful eye on Wednesday’s US Consumer Price Index (CPI) data for June. So far, the Fed has continued to pursue a policy of hiking interest rates to tame the inflation it created in 2020-2021.
If CPI data comes in hot (as is expected), it would put a damper on risk appetite, if history is any indicator.
Meanwhile, the DXY has reached 107.8 - a level not seen in over two decades. As such, it is unreasonable to expect an imminent raging bull market as long as this trend continues. This is not to say Bitcoin cannot reverse towards $30,000 in July, but rather tempers expectations in the context of unfriendly monetary conditions. This idea assumes Bitcoin remains relatively correlated to risk assets; a correlation that will eventually break down as it has in the past.
Long story short, BTC/USD must take out the steep and accelerating local downtrend in order to offer a technically viable bullish setup. Barring that, $19,900 & $19,000 are levels to look for absorption. If both fail, a sweep of $17,600 is back on the table, and while I do not expect the latter scenario to play out, it’s good to be prepared for one final scare before the real action begins.