The pair will possibly continue rising as investors rush to buy the dip.
Buy BTC/USD hoping that traders will rush to buy the dip.
Have a take-profit at the psychological level of $36,000.
Put a stop loss at yesterday’s low at $30,220.
Set a sell stop at $30,220.
Have a take-profit at $29,000.
Add a stop loss at the current $34,758.
Bitcoin price is attempting to bounce back after falling by more than 30% in the past few days. The BTC/USD is trading at $34,758, which is 15% higher than yesterday’s low of $30,220. Other cryptocurrencies like ETH, XRP, and LTC are also crawling back.
Profit-Taking and Stronger Dollar
The price of Bitcoin crashed yesterday, a few days after it reached its all-time high of $42,122. Before the crash, the currency was 940% higher than last year’s low of $3,830. This made it the best-performing asset in the financial market. In the same period, gold rose by about 25%, while the S&P 500 rose by more than 70%.
Therefore, the recent volatility is possibly because of profit-taking among retail and some institutional investors. Indeed, in a popular tweet sent yesterday by Scott Minerd, Chief Investment Officer at Guggenheim Partners, said that the recent rally was unsustainable. He suggested that investors should take some money off the table.
Still, institutions are optimistic about the Bitcoin price. In a statement, Anthony Scaramucci, the founder of Skybridge Capital, said that he was buying the dip. Other large investors were also said to be buying the currency.
The BTC/USD also declined because of the relatively strong US dollar. The US Dollar Index, which gauges the currency’s performance against its peers, rose by more than 0.40% yesterday. In the past few days, it has jumped by more than 1.45% as risks continue rising. Some of these risks are the political crisis in the United States and the rising number of coronavirus cases in Europe, North America and China.
The dollar is also rising because of the potential $3 trillion stimulus package by the Biden administration. That package will possibly accelerate US recovery and lead to higher interest rates faster than earlier expected.
Bitcoin Technical Analysis
The BTC/USD formed a double-top pattern at the resistance level at its all-time high as shown on the four-hour chart. The price has moved below the 25-period and 50-period exponential moving averages. It has also moved above the rising black trendline that connects the lowest levels in December.
Therefore, the pair will possibly continue rising as investors rush to buy the dip. This will possibly see it cross the two EMAs as bulls attempt to move above the resistance at $35,000. On the flip side, a move below yesterday’s low at $30,220 will invalidate this trend.