For much of this year, rising inflation has supported Bitcoin prices allowing the cryptocurrency to climb to yet another all-time high in November. However, with global policy makers expressing a more hawkish tone, Bitcoin prices have stabilized above the $45,000 mark, which continues to provide support for the imminent move.
Much like Gold and other safe-haven assets, investors have used Bitcoin against rising inflation. With higher interest rates and a faster pace of tapering now expected, further rate hikes may pose an additional catalyst for price action over the longer-term.
From a technical aspect, the fact that prices have retraced by over 20% since the November high confirms that Bitcoin has entered into a bear market. Although price action is currently trading within a well-defined range, bulls may struggle to regain control over the systemic, prominent trend, at least for now.
On the weekly chart below, price action continues to linger below key Fibonacci levels of prominent moves with the MACD (moving average convergence/divergence) crossing above the zero line.
If the fundamental backdrop remains intact, Bitcoin prices may resume their bearish move unless investors continue to seek refuge in digital assets.
Bitcoin Weekly Chart