Written by Yuya Hasegawa, bitbank

Bitcoin failed to breach a key technical resistance–its 200-day moving average–at the start of the week and dips below $27k. Some market watchers pointed out the geopolitical risk regarding the confrontation between Hamas and Israel as the catalyst for this week’s decline in bitcoin’s price. However, given the declines in VIX and U.S. treasury yields and the rise in U.S. stock market this week, bitcoin’s decline may have different reasons behind it. 

Bitcoin’s market dominance by its market capitalization has surged this month above 50% for the first time since July, meaning that the market participants are pulling their money out of altcoins faster than they do out of bitcoin. The sentiment in the altcoin market worsened this week after Ripple’s CFO left the company and the Ethereum foundation had reportedly sold ETH.

Also, failing to break above the 200-day moving average and to defend the upper bound of ichimoku cloud could have deteriorated bitcoin’s technical sentiment as these technical indicators hold significance in determining rather long-term trends for any financial assets.

Nevertheless, bitcoin’s decline has come to a halt on Thursday even though the headline U.S. CPI came in slightly above market expectation. Core CPI, on the other hand, did not change from August, and MoM CPI did come in higher than market expectation, but it declined from +0.6% to +0.4% in September.

We also saw some dovish shifts in Fed officials’ stance on monetary policy this week as a handful of them suggested higher long-term yield will do the job for them. The Atlanta Fed president Bostic went so far as to say that there will be no need for additional rate hikes anymore. As a result, the market had hit a break on bond-selling this week.

The technical sentiment has deteriorated for bitcoin, but it could be said that the macro environment is starting to shift in favor of the flagship cryptocurrency. The price has already retraced half of the rise since September, so the correction could be complete and the price will likely consolidate around the level a tad below $27k in the near term.