Crypto analyst Kabuki has explained why the Bitcoin rainbow chart shows that the price range is above $60,000. The analyst noted that BTC is mirroring past cycles and suggested that a base may be forming soon for the leading crypto. 

Bitcoin Rainbow Chart Shows Why Price Is Ranging

In an X post, Kabuki said that Bitcoin is stuck between $65,000 and $68,000 for a reason and that this isn’t random but simply BTC repeating history. He noted that in 2017, a base formed, which led to a parabolic expansion. The same happened in 2021, which again led to a parabolic expansion. 

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Kabuki stated that the same structure is playing out again for Bitcoin this time around and that this range is an accumulation phase before the breakout. His accompanying chart showed that the leading crypto is likely to rally as high as $400,000 in the next bull cycle, with a top likely in 2029. Meanwhile, the chart also confirmed that a bottom may be forming soon, with the current range a good buy zone. 

However, Kabuki suggested that there is still the possibility of Bitcoin dropping to $42,000. In another X post, he said that BTC is perfectly following a descending channel pattern with the drop from its all-time high (ATH) around $125,000. The analyst predicted that the leading crypto could drop from $69,000 to $42,000 as this bearish pattern continues to play out. He added that lower highs plus more lower highs will lead to the last shakeout before the rally to $200,000. 

BTC Back Inside The Bear Flag

In an X post, crypto analyst Colin stated that Bitcoin is back inside the bear flag, providing optimism about a bullish reversal. However, he warned that the highest the market may see is a short-term BTC rally to $80,000 if the U.S.-Iran war actually ends. The analyst added that Bitcoin will have to prove itself by first breaking above the resistance levels immediately ahead. 

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Colin reiterated that any short-term pump in Bitcoin will eventually be sold off and that the downtrend will resume in time. As such, he opined that any pump will be a chance to offload heavy positions rather than as a shot at new ATHs. 

The analyst also agreed with another analyst’s view, noting that the broader trendline is looming despite Bitcoin’s return within the channel. The analyst stated that there will be a true change in structure only if BTC breaks this trendline. He added that this could happen at lower levels, but that it is hard to say this was the bottom range. 

At the time of writing, the Bitcoin price is trading at around $68,700, down in the last 24 hours, according to data from CoinMarketCap.

Featured image from Pixabay, chart from Tradingview.com

The Bitcoin price has responded to yesterday’s release of the FOMC Minutes with a brief bounce to $16,990, only to revert back to the previous range of around $16,800 shortly after, within 30 minutes. And this trend could continue in the weeks and months ahead. Macro analyst Alex Kruger stated:

Welcome to the 2023 Pump and Whack ranging market. Markets pump on falling inflation, and the Fed whacks it.

The analyst based his opinion on a series of tweets from the chief economics correspondent at The Wall Street Journal, Nick Timiraos. The renowned journalist said that one of the key statements in the meeting minutes is that Fed officials are concerned that an “unwarranted easing of financial conditions” could “complicate” their fight against inflation.

That’s probably one reason why the FOMC minutes contain almost no discussion of how much officials plan to raise interest rates at the February meeting. Instead, the minutes state that officials continue to face a difficult communication task and want to avoid broad “unwarranted” easing of financial conditions.

While investors see a faster decline in inflation and respond with relief rallies, the Fed could in turn squelch that euphoria. If the CPI data turns out much better than estimates, the phenomenon of December 13 and 14, when the CPI data and the FOMC meeting occurred in quick succession, could be repeated.

In the run-up to and after the release of the CPI data, the Bitcoin price rose by almost 10% to $18,350, only to be brought back down to earth by the Fed’s hawkish statements. Bitcoin subsequently fell 12% to $16,280.

This “pump and whack” trading could continue in January and February as numerous experts predict another significant drop in inflation. CPI data for December 2022 will be released on January 12, 2023, at 8:30 am EST. Thus, positive numbers could cause a rally, but with a tight expiration date.

The next FOMC meeting will be held from January 31 to February 01. The subsequent press conference will then take place as usual at 2:00 pm EST on the second day. That’s when the Fed’s hawkish hammer could strike, bringing down the Bitcoin price again.

At press time, the Bitcoin price was at $16,793, stuck in a tight range from $16,250-$17,000 till December 17.

Bitcoin Price In The Run-Up To The Next FOMC Meeting

The meeting minutes also show that Fed officials agreed that the Fed needs to slow the pace of its aggressive rate hikes (50 bps in December). At the same time, it noted that “most participants emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance.”

This could suggest that Fed officials might be willing to return to a quarter percentage point increase at the next meeting, but also that they remain open to an even higher than expected final rate if high inflation persists.

The minutes also show that relatively few concerns were expressed at the December meeting that the central bank might go too far at this point and trigger a recession. Only some participants acknowledged that the risks to the inflation outlook must have become more balanced, meaning that the risk of doing too little was no longer much greater than the risk of doing too much.

In response, Goldman Sachs commented that the “Fed either pivots too early and turns dovish into a high inflation scenario which is fairly bearish the USD thus helping gold or they pivot too late and cause a much bigger recession than is priced in right now, resulting flight to safety helps gold.”

Featured image from Yahoo! Sports, Chart from TradingView.com