Weekly Market Update: Two possible scenarios as Bitcoin drops to $20,000.
  • Bitcoin is testing lower levels
  • What’s in store next week?

The first Consumer Price Index (CPI) result for the Eurozone is reported at 9.1%, which means that the inflation rate is not easing after the ECB's first interest rate hikes. Many analysts expect the ECB to act more forcefully to curb inflation.

The U.S. unemployment rate was slightly higher than expected, which could be seen as positive news for the U.S. dollar and an indication that the Federal Reserve's slowdown of the labor market is working. The Fed hopes that by raising interest rates, it can slow the labor market enough to bring inflation down, but not so much that unemployment takes over.

Bitcoin is testing lower levels

Bitcoin is trading in a crucial daily demand zone. There are two possible scenarios that could occur. For the bullish scenario, Bitcoin needs to overcome and gain the supply zone at $21,300 - 21,900. Then it could rise back to the $24,000 - 25,000 range.

In the bearish scenario, Bitcoin will take out the Higher Low's (HL's) made about two months ago and look for fresh liquidity in the $16,200 - 17,500 region. This is also the bottom of the weekly demand zone, which is very important for the continuation of the uptrend. If Bitcoin is unable to sustain this weekly demand, then it could fall further to the $11,700 area. At that point, Bitcoin will have fallen about 83% from the ATH.

Ethereum has bounced off the new daily demand zone. To stay bullish, it needs to overcome the two daily supply zones around $1820 - 1880 and $1970 - 2090. If it loses the $1350 level, it could fall lower to the $1000 level.

What’s in store next week?

Monday next week is a national holiday in the U.S. and Canada, which will likely provide low volatility. On Thursday, the ECB will decide on the interest rate for September, and is expected to raise it by 50 to perhaps 75 basis points. The problem for the ECB is that inflation is four times its target, and it will likely continue to rise in the coming months.

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