Bitcoin trader keeps $40.8K BTC price target amid warning over risk asset ‘pain trade’

Bitcoin

Bitcoin trader keeps $40.8K BTC price target amid warning over risk asset ‘pain trade’

What could rile investors more than a capitulation in stocks and crypto is sideways trading “for a long time.”

Bitcoin trader keeps $40.8K BTC price target amid warning over risk asset ‘pain trade’

Bitcoin (BTC) consolidated below $40,000 on May 5 after United States economic policy excitement saw a  spike to one-week highs.

Bitcoin trader keeps $40.8K BTC price target amid warning over risk asset ‘pain trade’

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Fed sparks little crypto reaction

Data from Cointelegraph Markets Pro and TradingView confirmed an overnight peak of $40,050 on Bitstamp following comments from the Federal Reserve and Chair Jerome Powell.

The U.S. central bank had conformed to market expectations with a 0.5% key rate hike, also suggesting that similar repeat hikes would follow.

With that, a modest market rally left Bitcoin eerily lacking volatility in what was a strong contrast to previous Fed pronouncements on topics such as inflation.

While many expected risk assets en masse — including crypto — to deflate under the new policy, not everyone believed that such a scenario would cause investors maximum discomfort.

“With so many people calling for melt ups and melt downs, maybe the pain trade is to chop sideways in risk assets for a long time,” economist Lyn Alden argued.

Bitcoin circles likewise were not expecting major trend changes. Ben Lilly, a token economist at Jarvis Labs, highlighted low funding rates on BTC derivatives markets.

“Market saw some relief with Powell’s comments. But will it continue for the crypto market? To start, funding rates have been negative for a long period of time. This tends to happen at range lows,” he wrote in a series of tweets:

In terms of BTC price capitulation scenarios, meanwhile, on-chain monitoring resource Whalemap repeated its previous assertion that the area between $25,000 and $27,000 would constitute “max pain” for Bitcoin hodlers.

“A lot of liquidity and stop losses are stacked there,” it explained as part of Twitter comments.

BTC/USD annotated chart. Source: Whalemap/ Twitter

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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