Bitcoin price rallies to $32.3K, but three factors could limit its recovery

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Bitcoin (BTC) price action has been surprisingly bullish since May 27. Weekends, especially holiday weekends, are notoriously volatile and indecisive, with major swings in price movement being the norm. Even in bull markets, bearish price action is often the norm, but BTC has bucked this trend.

BTC/USD daily chart (Coinbase) Source: TradingView

Bitcoin rose almost 11% between May 27 and May 30, passing the critical level of $28,600 to return above $30,000 to $31,700. The weekly close was the highest close in twenty days and it gave the bulls the strongest three-day run in more than two months. However, macro fears could weigh on any new upside potential.

Global food shortage fears rise as commodity prices rise

The global food supply is a primary, yet easily overlooked factor that contributes to Bitcoin’s future price potential. Since the start of the COV-19 pandemic, governments around the world have closed their seaports and airports, cutting off and interrupting the flow of goods. This disruption will take years to return to normal, but it is not the primary cause for concern.

In the United States, fertilizer costs have increased exponentially over the past 18 months. In January 2021, the Fertilizer Price Index stood at $78.83 and currently stands at $254.97, up nearly +225%. A combination of supply chain disruptions and ongoing shortages are expected to continue to disrupt this market.

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Fertilizer price index Source: ycharts.com

Individual commodity prices continue to rise and are a major contributor to the steady rise in inflation. In particular, wheat (CBOT: ZW) hit new all-time highs in February 2022 and remains close to those all-time highs. In 2022 alone, wheat futures prices are up 76% and over 143% in the past 18 months.

Wheat Futures (ZW) Weekly Chart (CBOT) Source: TradingView

Oil futures (NYMEX:CL) continue to rise and are now trading at levels not seen since July 2008. Traders and investors fear that oil will climb as high as $150 a barrel once China will have ended its COVID shutdown. When this happens, demand will most certainly return and further impact oil.

Crude oil futures contracts (NYMEX). Source: Trading View

Stock market growth concerns

Stock markets around the world continue to come under significant pressure. Rising inflation, soaring commodity prices, supply chain disruptions and conflict in Ukraine have put risk investors and traders on the defensive.

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Several high-impact economic events are expected to occur this week, which will likely pause any major action moves in stock and cryptocurrency prices. The release of unemployment data in the European Union arrives on June 1, along with the Bank of Japan’s decision on interest rates and data on the manufacturing sector. Additionally, US unemployment figures and nonfarm payrolls data will be released on June 3.

In addition to a busy week, on June 3, three former residents of the US Federal Reserve are also expected to speak: John Williams and James Bullard will speak on June 1, Lael Brainard on June 3.

Technical Levels May Limit Bitcoin Recovery to $37,000

Bitcoin just set a new all-time high of nine consecutive weekly losses. Since the start of the current weekly candlestick, buyers have returned and pushed BTC above the entire trading range of the past two weeks and well above the 50% range of the flash crash of the May 9 weekly candlestick. 2022.

If Bitcoin price can close above the daily Kijun-Sen at $31,350 or higher, then BTC has a very open path to reach the $37,000 value zone. Moreover, the 2022 volume profile is very slim, between $32,000 and $37,000. But $37,000 could be where the bulls will face off against the sellers again.

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Daily chart Ichimoku Kinko Hyo BTC/USD. Source: Trading View

If the bulls want to send a message to the market that a new uptrend is about to begin, then they will need to push the price of Bitcoin to a daily close near $44,000. In this scenario, BTC would trigger an “ideal bullish Ichimoku breakout,” giving bulls the path they need to retest the all-time high.

With stock prices remaining in bearish territory and commodities remaining at all-time highs, at the very least, a temporary reversal is likely to occur. If the old adage in technical analysis, “volume precedes price,” is repeated, traders should see food and oil sell off while stocks and Bitcoin rise.

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