Risk Assets Blunted

Another disappointing week for Bitcoin bulls. Following initially strength over Monday and Tuesday which saw BTC breaking out to its highest level since early Feb, the market has since reversed with BTC now ending the week in the red. The move lower comes despite a drop lower in USD this week with risk assets struggling to gain upside amidst a hawkish repricing in global central bank expectations. Firmly hawkish signals from the ECB and BOE this week has further dented risk sentiment as traders eye rising inflationary risks linked to the impact of the Iran war.

Downside Risks

Fears of a prolonged conflict are keeping energy price expectations skewed higher for now, creating hawkish sentiment among central bankers. While this narrative remains, BTC might struggle to gain upside momentum amidst a broader lull in risk assets. As such, only news of a ceasefire looks likely to dramatically change the near-term outlook here. Additionally, BTC could see heavier downside emerge if the Fed turns more hawkish in coming weeks/months. Currently, the Fed is lagging other G7 central banks in its forward guidance, still forecasting a rate cut this year. If that message changes, risk assets (including BTC) could take a fresh leg lower.

Technical Views

BTC

For now, the market remains above the $69,605 level as the current base holds. However, while still within the bear channel and capped by the $80,185 level, risks of a fresh downside push remain high with $53,030 the next bear target if we do turn lower.