The week that has just unfolded is all-set to be jam-packed. Major Wall Street companies are set to reveal their earnings for the quarter that ended in June. Alongside, potential rate hike announcements and other macro-dataset releases are also expected to be officially unveiled. Resultantly, Bitcoin is predisposed to tread a slippery slope over the next few days.
Not so optimistic expectations
Google and Microsoft are set to release their Q2 report tomorrow. And on Wednesday and Thursday, Meta and Apple will follow suit.
Per expert analyses, most companies are expected to pose a declined figure. Let’s take the case of Meta, for instance. A recent report suggested that the market expects Meta Platforms to deliver a year-over-year decline in earnings on lower revenues when it reports its results.
When 2021 Q4 earnings were revealed in February this year, Meta’s stock price fell by 26% in a single day. However, when Q1’s earnings were released at the end of April, hardly any damage was done, for META traded in green after beating analysts’ DAA expectations. It’s worth noting. Nonetheless, the company had recorded its slowest revenue growth in a decade, and the losses incurred by its metaverse arm had substantially contributed to the same.
So, this time also, even though revenue figures are expected to decline, investors will closely be considering other growth-related factors before buying/selling the earnings news.
Bitcoin and the S&P 500 have shared an on-and-off relationship on the macro-frame. Of late, their mutual dependency had noted a free-fall. However, a substantial recovery has been registered over the past few days. Per data from Skew, from 18 July’s 28.2%, the BTC-S&P 500 realized correlation has climbed up to 36.6%. This means that the markets have started aligning their biased directions.
In fact, during macro-uncertain times, there has seldom been any instance where the S&P 500 and Bitcoin have not moved in tandem. And over this week, the said narrative will likely gain more steam.
It is interesting to note that the BTC-S&P 500 realized volatility has declined from 65% to 26% over the past fortnight. This means that the volatility in the Bitcoin market stands withered when compared to that of the SPX. Thus, the stock market can be expected to call the shots this week, and Bitcoin can be expected to follow suit.
The FOMC factor is also set to impact the markets’ performances. The monetary policymaking body’s interest rate announcement is due on Wednesday. The Chicago Mercantile Exchange, on its part, expects rates to either be hiked by 75 bps (78%) or 100 bps (21%).
However, the market might not necessarily react negatively because it has seen several such hikes over the past few months. A recent report noted,
“With large hikes an established norm amongst policymakers globally, 75bp no longer feels so significant.”
Here, it is worth recalling that Bitcoin tumbled to $19k on the release of inflation data at the beginning of this month but was quick to rebound. So, the market can expect an initial shock wave on the macro announcement this time, but the same might not necessarily be able to fracture the mid-term bullish outlook.
Read More: U.S Inflation rises to 9.1%, Bitcoin tumbles
As highlighted in a recent article, Bitcoin’s path to $28.2k remains precise. However, if all the set-of events rub off negatively and induce a pessimistic sentiment, the king coin can be expected to slide down.
Bitcoin faces quite a stiff resistance in a range extending from $22.5k to $23.2k. Here, over 793k addresses have purchased a total of 764k BTC. So, even if Bitcoin manages to push higher over the subsequent few trading sessions, it has a high chance of being hindered in the said range.
Bears were already gaining control on the short timeframe charts, and Bitcoin had slipped below its 50-day MA on the 4-hour. If not rescued by the 100/200 day MAs, it would likely stoop to $20.8k. If macro-factors play spoilsport, the doors to $19k and $17.6k would subsequently open.
On the flip side, if HODLers do not panic, then the $28k target would still hold water, and BTC can be expected to attain the same post clearing the $22.5k – $23.2k hurdle.