BTC/USD Forex Signal: Relief Rally Likely

Crispus Nyaga

While the pair may keep falling, there is a possibility that it will have a relief rally as investors weigh the current contagion risks.

Bullish View

  • Set a buy-stop at 43,000 and set a take-profit at 45,000.
  • Add a stop-loss at 42,000.
  • Timeline; 2 days.

Bearish View

  • Set a sell-stop at 41,500.
  • Add a take-profit at 40,000 and a stop-loss at 42,500.

The BTC/USD slumped to the lowest level since early August as volatility rose. Bitcoin fell to $40,000 in the overnight session, meaning that it has collapsed by more than 20% from its highest point this month. This drop brought its total market capitalization to more than $808 billion. Other cryptocurrency prices like Ether, XRP, ADA, and BNB also tumbled as well.

Multi-Asset Sell-Off

The BTC/USD collapse coincided with a sharp decline in Wall Street and commodities. On Monday, the Dow Jones crashed by more than 800 points while the Nasdaq 100 and S&P 500 indices declined by more than 100 points.

At the same time, commodities like iron ore, crude oil and copper also declined. The few assets that gained in the overnight session were risk assets like the CBOE Volatility Index (VIX) and the US dollar.

This decline was triggered by two main factors. First, there is the ongoing crisis in China, where the second-biggest real estate company is facing default risks. The company failed to make an instalment on Monday and has another one due on Thursday.

Therefore, investors are on the hook for as much as $306 billion. There are also risks that the crisis could have an impact on other sectors of the Chinese economy.

Second, the BTC/USD pair declined as investors wait for the upcoming Federal Reserve decision. The bank will start its September meeting today and deliver its decision on Wednesday. Economists expect the central bank to leave interest rates between 0% and 0.25%. They also expect the bank to maintain its quantitative easing policies unchanged but provide signals about when it will start tapering.

The BTC/USD also fell as concerns about the debt ceiling rose. There are concerns that the divided Congress will not reach an agreement on expanding the debt ceiling.

BTC/USD Analysis

The daily chart shows that the Bitcoin price declined sharply in the overnight session. The pair bounced back and is trading at 42,800, which is a notable price since it was the lowest level on September 7. The price has moved below the 25-day and 50-day moving averages (MA). The Relative Strength Index (RSI) has been in a downward trend.

Therefore, while the pair may keep falling, there is a possibility that it will have a relief rally as investors weigh the current contagion risks.

BTC/USD Signal

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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