Bullish view
Bearish view
- Set a sell-stop at 41,000 and a take-profit at 40,000.
- Add a stop-loss at 42,000.
Bitcoin continued to supercharge on Tuesday morning as demand for the coin continued. The BTC/USD pair surged to a high of 42,100, its highest point since April 2022. It has soared by more than 172% from its lowest point since November last year.
Federal Reserve and SEC
Bitcoin has been in a strong uptrend, helped by the Federal Reserve and the Securities and Exchange Commission (SEC). Most economists believe that the Fed will start easing its tight monetary policy in the coming months.
Recent data showed that American inflation has dropped slightly in the past few months. It has moved from the 2022 high of 9.1% to 3.2%. There are signs that inflation continued falling as the price of energy moved downwards.
In Europe, the headline inflation figure has dropped to 2.4% and is quickly approaching the European Central Bank (ECB) target of 2.0%. Therefore, like the Fed, most economists expect the ECB will also slash rates in the first half of 2024.
Bitcoin and other risky assets tend to do well when interest rates are falling. This explains why the coin has surged this year.
The other big catalyst is the recent spot ETF applications by large companies like Blackrock, Franklin Templeton, and Invesco. Most analysts believe that the SEC will ultimately bow to pressure and approve the ETFs.
An approval will be positive for BTC because of how rare it has become. Bitcoin supply in exchanges has dropped to the lowest level in years. Over 19.5 million Bitcoins have already been mined, leaving less than 1.5 million of them to be mined.
The other big Bitcoin catalyst is the upcoming halving, which will happen in late April of 2024. Historically, Bitcoin tends to do well ahead of a Bitcoin halving.
BTC/USD technical analysis
The BTC/USD pair has been in a strong uptrend in the past few months. It has moved above the key resistance levels at 40,000 and 41,000. On the daily chart, the pair remains above the 50-day and 100-day moving averages. It formed a golden cross when the 200-day and 50-day moving averages crossover.
The Average Directional Index (ADX) has retreated but it remains above 40. Therefore, the outlook for the BTC/USD pair is bullish, with the next level to watch will be at 45,000.
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