Bullish View
- Set a buy stop at 51,000 and a take-profit at 54,500 (S1 of standard pivot point)
- Add a stop-loss at 49,000.
- Timeline: 1 day.
Bearish View
- Set a sell-stop at 49,000 and a take-profit at 47,000.
- Add a stop-loss at 51,000.
The BTC/USD price crashed by almost 20% as the market reacted to the latest US inflation data and the decision by Tesla to stop accepting the currency. Bitcoin price declined to $46,000, the lowest level since March, and then bounced back to above $50,000.
High Interest Rate Concerns
The BTC/USD has surged in the past few months because of the easy money policies by the Federal Reserve. The bank has brought interest rates to zero and boosted its balance sheet to almost $8 trillion. At the same time, while other central banks have started hinting at tightening, the bank has insisted that it won’t change policies in the near term.
The Fed faces a tough choice as the unemployment rate and inflation rises, defying the so-called Philips curve. On Friday, data showed that the US unemployment rate rose from 5.9% in March to 6.1% in April. And yesterday, the numbers revealed that the headline inflation rose by 4.2%, the fastest growth in 13 years. Therefore, analysts have started to price in a change in mind by the Fed.
The BTC/USD also crashed after the latest decision by Tesla to suspend accepting the cryptocurrency. A few months ago, the company invested $1.5 billion into the currency. It also started to accept it when people bought Tesla vehicles, accessories, and other solar products. While the move was widely lauded by cryptocurrency enthusiasts, it was criticized by environmentalists for its carbon emissions. In fact, some ESG funds that had invested in the company started to reduce their exposure.
In a surprise statement on Wednesday, Elon Musk cited the environmental concerns when he announced that the company would stop accepting the currency. He also said that the firm was exploring other digital currency options for the company.
BTC/USD Technical Forecast
The BTC/USD price dropped to a low of 46,000 after the Tesla announcement. The pair moved below the third support level of the standard pivot points. It also moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) dropped to the oversold level. It also seems to have formed an inverted cup and handle pattern. Therefore, the pair will likely bounce back as traders fade the news by Tesla and on inflation. This will likely push it above the first support of the pivot point at 54,000.
