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Bitcoin Falls to $28,800 - A Critical Level For Traders

GB Market Commentary 20/04/2023

by Marcus Sotiriou


Bitcoin dropped further to $28,800 overnight, as it sits on a key support level currently. From a technical analysis perspective this is a pivotal moment for Bitcoin – if $28,800 fails to hold on the daily time frame, this would signal a deviation back into the range which it just broke out of (a 10-month consolidation). $28,800 is also the Summer 2021 low, further providing confluence to its significance.


Yesterday’s drop in Bitcoin’s price is partly due to the UK’s inflation data which was released. UK headline CPI YoY is 10%, above the forecast of 9.8%, and core CPI is above 6% YoY. Retail price inflation also superseded the consensus forecast. This is the 10th consecutive month where UK CPI is above 10%.


However, the UK real yield curve remains extremely low, which means that the current monetary policy might not induce sufficient tightening. We are already seeing stagnant demand as UK real GDP is still below Q4 2019, and unemployment increased to 3.8%.


The combination of persistently high inflation, stagnant demand and higher unemployment, means that the UK economy could be entering stagflation soon, where we have high inflation and slow growth simultaneously.


Institutional investment in blockchain businesses continues to thrive however, particularly in Africa. According to the latest CVVC African blockchain funding report, $474 million was invested into African blockchain businesses, such as digital asset brokers, in 2022 – a 429% increase from the previous year. More than 50% of the funds were allocated to categories such as digital asset brokers, custody and exchanges, which raised over $250 million.


The total funding for firms such as digital asset brokers in Africa amounted to 29 deals – four more than that settled in 2021.


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