BTC Threatening a Fresh Move Lower?

Following a corrective grind higher over the last month or so, Bitcoin prices turned sharply lower into the back end of last week as fresh central bank hawkishness weighed on risk sentiment. Both the Fed and the ECB seemingly caught markets a little off guard last week, fuelling recession fears in the outlook for the first half of 2023. The Fed lifted its peak rate projection, signalling that rates would need to be higher for longer while the ECB was also seen warning that rates would need to increase significantly further. With US retail sales data then seen tanking in November, markets have gravitated back towards fears for global economic activity, which has driven risk assets sharply lower in recent days.

Early 2023 Outlook

Looking ahead to early 2023, the outlook for crypto remains fairly subdued. However, there are some upside risks worth considering. The biggest one of these is the potential reopening of the Chinese economy in early 2023 which, if confirmed, would be a significant upside driver for risk assets including crypto. Furthermore, if there is any sudden acceleration of the drop in US inflation this might help shift the Fed outlook in favour of an earlier end to tightening which would also help lift the outlook for crypto.

Technical Views

BTC

Following the latest leg lower in BTC, the market has been grinding higher since the November lows, moving with a narrow bull channel. However, the move stalled into a retest of the 18545 area. This is a key resistance level with the bear trend line from August highs sitting just above. Until we see a break of that region, the focus remains on further downside near term with a break of 16660 opening the way for a test of 14910 next.