Bearish view
- Sell the BTC/USD pair and set a take-profit at 25,000.
- Add a stop-loss at 27,000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 26,500 and a take-profit at 27,500.
- Add a stop-loss at 25,000.
Bitcoin price consolidation continued during the weekend as demand and volatility remained low. The BTC/USD pair was trading at 26,000 on Monday morning, where it has held steady after plunging hard on August 17th.
Jerome Powell statement
Bitcoin and American stocks largely ignored the relatively hawkish statement by Jerome Powell, the Federal Reserve chair. Speaking at the Jackson Hole Symposium in Wyoming, he noted that America’s inflation remains significantly high.
As a result, he warned that the bank could deliver at least one more interest rate hike in its meeting in September. Such a move will push rates to the highest point in more than two decades.
The rising rates will lead to more pain for most Americans who have seen their mortgage rates and credit card rates jump to a two-decade high. Worse, millions of Americans will restart paying back their student loans on September 1st.
Bitcoin tends to react negatively to high interest rates. For one, the rising rates have pushed returns on safe assets like cash and government bonds to the highest point in years. For example, certificates of deposits (CDs) are now yielding over 5%. Similarly, some money market funds have a yield of over 5%.
Therefore, many investors have started moving their cash and other investments to these higher-yielding assets. This explains why the US dollar index (DXY) has jumped to the highest level since June while Bitcoin has struggled.
The next likely catalyst for the BTC/USD pair will be the upcoming US consumer confidence, inflation, and jobs data. The Conference Board will publish the latest consumer confidence figure on Tuesday.
These numbers are expected to show that consumer confidence dropped in August. After that, the US will publish the PCE inflation and non-farm payrolls (NFP) data on Thursday and Friday, respectively.
BTC/USD technical analysis
The BTC/USD pair made a strong bearish breakout on August 17th, the worst single-day drop in months. It has now been moving in a consolidation phase since then. As a result, it has formed a bearish flag pattern, which is a sign that it will have a breakdown soon.
Bitcoin remains below the 25-day and 50-day moving averages while the Average True Range (ATR) has slipped to the lowest level since August 17th. The pair will likely have a bearish breakout this week, with the initial target being at 25,000.
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