Bullish view
- Buy the BTC/USD pair and set a take-profit at 43,540.
- Add a stop-loss at 40,640.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 41,500 and a take-profit at 40,000.
- Add a stop-loss at 43,550.
Bitcoin price staged a strong comeback as the recent selling pressure faded. The BTC/USD pair bounced back from last week’s low of 38,505 to a high of 43,000. It still remains much lower than the year-to-date high of 49,100.
Bitcoin’s selling pressure fades
The BTC/USD pair has been in a strong downward trend after peaking at 49,100 after the SEC approved eleven spot Bitcoin ETFs earlier this month. This retreat happened as investors were selling the news, which was in line with expectations.
The decline happened as many investors in Grayscale Bitcoin Trust sold their assets, as evidenced by the recent outflows. This sell-off is happening as these investors move from the GBTC, which has a 1.50% expense ratio to the other cheaper ones. ETFs by companies like Blackrock, Fidelity, and Franklin Templeton have a smaller ratio.
Still, as expected, inflows into these ETFs has started to slow down in the past few weeks. The most recent data shows that net inflows accelerated to $153 million in the last 9 trading days.
Bitcoin price also rose as investors embraced a risk-on sentiment in the market. The fear and greed index has jumped to the extreme greed zone of 77 while American equities have surged to a record high. The Dow Jones, S&P 500, and Nasdaq 100 indices have continued soaring this year.
It also rose after the encouraging US PCE report. According to the statistics agency, the PCE report showed that inflation moved below 3% for the first time since 2021. This is an important report because it is what the Fed focuses on when making its decision.
Therefore, while the Fed is not expected to cut rates this week, analysts believe that it could start slashing in March or May or June. Bitcoin thrives when the Fed has embraced a dovish tone.
BTC/USD technical analysis
The BTC/USD pair bounced back after crashing to a low of 38,506 on January 23rd. It has crossed the key resistance point at 40,642, its lowest swing on January 3rd. The pair has moved above the 50-period ALMA while the Average Directional Index (ADX) has moved sideways.
Bitcoin has also formed an inverse head and shoulders pattern. Therefore, the outlook for the BTC/USD pair is bullish, with the next point to watch being at 43,550. The stop-loss of this price is 40,642.
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