Bullish View
- Set a buy-stop at 33,000 and a take-profit at 35,000.
- Add a stop-loss at 30,000.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 29,500 and a take-profit at 27,000.
- Add a take-profit at 32,000.
The BTC/USD declined sharply on Monday as China intensified its crackdown on cryptocurrencies. Bitcoin dropped to $31,266, the lowest level in more than 2 weeks.
China Crackdown
In the past few months, China has intensified its crackdown on cryptocurrencies. A few weeks ago, the country blocked search engine results for the biggest cryptocurrency exchanges like Huobi and Binance.
The country’s central bank also endorsed a statement by the biggest financial trade groups, which urged their members to block any cryptocurrency transactions.
Further, the country intensified its battle on Bitcoin miners, who have become the largest consumers of power. On Sunday, it was reported that the country had intensified this crackdown in the southwest region. This is notable, since China accounts for 60% of all Bitcoin mining operations. The BTC/USD pair declined because investors were afraid that these miners would dump their holdings and tilt the demand and supply dynamics.
Meanwhile, the government also asked banks and fintech companies like Ant to track and lock all accounts that were dealing with cryptocurrencies. This means that it will be difficult for people in the country to deal with these coins.
The BTC/USD has also been pressured by the recent statements by the Federal Reserve. In its decision last week, the bank sent shockwaves to the market when it pointed to a rate hike in 2023. In the previous meetings, the bank signaled that it would hike interest rates in 2024, citing the unevenness of the recovery. Therefore, Bitcoin will likely react to the upcoming testimony by the Fed chair later today.
BTC/USD Analysis
The four-hour chart shows that the BTC/USD pair rose to a high of 41,302 last week. This was notable since the pair has struggled to move above this level several times before. It then declined after the Fed decision and is now targeting the floor of the rectangle pattern at 30,000.
The pair has also moved below the 25-day and 50-day exponential moving averages (EMA) while the Relative Strength Index (RSI) is along the lower band. Therefore, the pair will likely bounce back as the fears of the Chinese crackdown ease.
Furthermore, other areas of the market like stocks have bounced back after the Fed decision. If this happens, the next key point to watch will be 35,000. The alternate scenario is where the pair moves below 30,000. Such a move will signal that bears have prevailed and that they will start targeting the 2017 high at 20,000.
