Very uncertain predictions for the price of Bitcoin

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The medium/short term prediction for the price of Bitcoin has become, as far as possible, even more uncertain. 

The key point is the price swinging around $26,500, which is just above the 200-week moving average (200WMA). 

At the beginning of the year, the 200WMA was around the $24,400 mark, but over the course of 2023 it has continually risen. 

For example, at the beginning of February it was just below $24,800, while at the beginning of March it was already above $25,100. 

It is enough to mention that at Bitcoin’s peak price in November 2021, the 200WMA was just above $17,100. 

In early May, it rose above $26,000 for the first time in history, and in June above $26,300. It is now about $26,400. 

Hence the current price is not only slightly above the 200WMA, but it has been hovering around this threshold since 11 May. In other words, for almost a month now, the benchmark has become the 200WMA, which by the way is at an all-time high. 

Uncertainty drives the markets: mixed price predictions for Bitcoin

The fact is that right now there seems to be an equal chance that the price of Bitcoin over the short or medium term could go up, down, or sideways. In other words, a great deal of uncertainty reigns. 

For example, there are those who point out that the Long/Short ratio is continuing to rise, giving the idea of a bearish scenario. 

However, at the same time there are other indicators that in the short run seem to be bullish. 

However, referring again to the 200WMA, we see that in the past the price of Bitcoin has never been below that threshold for a long time. 

Moreover, since the 200WMA of BTC’s price has now been growing uninterruptedly for practically forever, albeit at very different rates of growth, one would think that over the medium term the higher probability is for further growth. 

Indeed, the longest period of Bitcoin’s price stationing below the 200WMA has just ended, because it occurred between July 2022 and March 2023, albeit with a few brief exceptions. 

In past years, it had been below this threshold for two months at most, and indeed after being there for so long in recent months, it is probably no coincidence that the price has risen again, and now for almost two months it has not been falling below the 200WMA for prolonged periods. 

So given that the situation is not at all clear, there are those who suggest standing still and watching what happens during this period to see what direction it will actually take next. 

The price compression of Bitcoin (BTC)

If we analyze the price curve of BTC in 2023, we find that as of 12 May, the range has become very compressed. 

Twice the price of Bitcoin has tried to break out of this compressed range, in late May and a few days ago, but in both cases the attempt failed within a few days. 

Excluding the spikes, this range turns out to be between $26,200 and $27,300, or slightly above the 200WMA on average. 

Given that BTC has been fluctuating within this range for almost a month now, excluding the two brief failed attempts to break out of it, it is clear that it has entered a compression phase from which it should come out sooner or later. 

The problem is that there are both those who argue that this compression phase is descending and those who argue that it is instead replicating the pattern of past cycles and thus would be preparing for a rise. 

What is clear is that it seems rather strange that it could continue to lateralize for a long time within such a compressed band, but it is not at all clear what direction it might take once it breaks out of this band. 

The degree of liquidity

However, there is an interesting signal. 

The price of Bitcoin is now being influenced greatly by the liquidity circulating in the financial markets. 

For many months now, that liquidity has been declining, largely due to the Fed’s particularly tight monetary policies

Since the beginning of June, the Dollar Index (DXY) has stopped rising, as it did in May, and in the very last few days it has even begun to fall slightly. 

If we compare the curve of the DXY index to that of the price of BTC in 2023, we find that when the DXY went down BTC went up, and vice versa. This is a sign of an inverse correlation that could result in interesting signals.

For example, in May the DXY went up, and BTC went down. Previously in the second half of March DXY went down, and BTC went up. 

As speculation is beginning to circulate that DXY may continue to fall in June, it is possible that the dollar liquidity in the financial markets is increasing slightly, and this could help the price of Bitcoin.