Bearish view
- Sell the BTC/USD pair and set a take-profit at 40,500.
- Add a stop-loss at 43,000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 42,200 and a take-profit at 44,000.
- Add a stop-loss at 40,000.
Bitcoin price continued to consolidate on Monday as traders waited for the next catalyst and as the recent spot ETF momentum faded. The BTC/USD pair was trading at 41,630, a few points above last week’s low of 40,245. It has fallen sharply from its highest point this month.
Bitcoin’s price action was expected because of what happened before the SEC approved eleven spot ETFs. Most investors bought Bitcoin in anticipation of the approval, especially after companies like Invesco, Franklin Templeton, and Blackrock got involved.
With their experience in the market, most investors believed that the SEC had no choice but to approve them. The situation became clearer after the SEC lost an important court case brought by Grayscale.
Therefore, the current performance of Bitcoin is in line with the concept known as buying the rumor and selling the news. It happens when an asset rallies hard ahead of a major event and then retreats when the event eventually happens.
Bitcoin’s performance is because traders are now waiting for another catalyst to spark the rally. This catalyst could be the ongoing bull run in the stock market now that US indices like the S&P 500 and Nasdaq 100 have surged to a record high. In some cases, Bitcoin tends to have a close correlation with these equities.
The next big thing that will move Bitcoin and other cryptocurrencies will be the hype surrounding the halving event that will take place in April. This partly explains why some investors are betting on a comeback in the options market.
BTC/USD technical analysis
The BTC/USD pair has been in a strong bearish trend after peaking at 49,000 earlier this month. It has retreated below key support levels at 45,000 and 42,000. On the 4H chart, it has moved below the 50-period and 25-period moving averages. It also sits above the key support level at 40,550, its lowest swing on January 3rd and December 14.
Bitcoin remains between the Woodie pivot point and its first support point. Therefore, the outlook for the BTC/USD pair is neutral with a bearish bias. The likely scenario is where the pair retests the key support at 40,245, the lowest swing on Friday. The alternative situation is where it bounces back and moves to the pivot point at 43,485.
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