Bearish view
- Sell the BTC/USD pair and set a take-profit at 14,500.
- Add a stop-loss at 17,000.
- Timeline: 1 day.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 17,500.
- Add a stop-loss at 14,500.
The BTC/USD price crashed to below 16,000 amid rising risks of a contagion in the cryptocurrency industry. Bitcoin plunged to a two-year low of 15,501, which was about 24% below the highest point this month. Other altcoins like Solana, Ethereum, and FTT crashed by a bigger pace.
Crypto contagion risks
Cryptocurrencies are having their worst week since May as concerns about the industry continued. In May, the main concern was the collapse of Terra, which pushed companies like Voyager Digital and Celsius.
This week, there are concerns that the crypto industry is having its Lehman moment following the collapse of FTX. Before its collapse on Tuesday, FTX was one of the biggest crypto exchanges in the world. It used to process billions of dollars worth of coins on a daily basis.
FTX collapsed after a report highlighted its relationship with Alameda Research. According to CoinDesk, most of Alameda’s assets are in FTX Token (FTT). Following the revelation, Binance announced that it was selling $500 million worth of FTT token.
After that, most of FTX’s customers decided to withdraw their cash, leading to a major liquidity crunch. As a result, the company requested to be acquired by Binance, which will provide the necessary liquidity. In a statement, Binance said hat it will not complete the transaction, citing a new SEC investigation and cases of fraid.
Therefore, the BTC/USD pair declined as investors sold their cryptocurrencies following the collapse of one of the biggest players in the industry.
These challenges intersected with the fear that the Federal Reserve will continue hiking interest rates in the coming months. It has already hiked interest rates by 400 basis points this year and hinted that it will continue doing the same in the near term.
Therefore, the coin will likely react to the latest American consumer price index (CPI). Economists expect inflation remained significantly above Fed’s target of 2.0% in October.
BTC/USD forecast
The daily chart shows that the BTC/USD pair dipped sharply this week. It managed to move below the important support at 17,626, which was the lowest level this year. It has struggled to move below this level several times this year. The pair also dropped below 16,000.
Bitcoin has moved below the 25-day and 50-day moving average and the Ichimoku cloud. Therefore, the pair will likely continue falling as confidence in the industry wanes. If this happens, the next key support to watch will be at 14,000.
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