Bearish view
- Sell the BTC/USD pair and set a take-profit at 15,000.
- Add a stop-loss at 18,000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 17,000 and a take-profit at 18,000.
- Add a stop-loss at 16,000.
The BTC/USD price remained under pressure during the weekend as cryptocurrency outflows continued. It declined to a low of 16,500, which was lower than last Friday’s high of 18,160. This price is slightly above last week’s low of 15,487.
FTX crisis escalates
Bitcoin and other cryptocurrency prices have had a tough month as contagion risks rise. On Friday, entities tied to Sam Bankman-Fried, including Alameda Research, FTX, and FTX US filed for bankruptcy.
This was one of the biggest meltdowns in the crypto industry considering that FTX was valued at over $32 billion. FTX US was also valued at more than $7 billion in its final fundraising round. Alameda Research had assets worth billions of dollars.
As a result, many Bitcoin holders, even in other exchanges decided to sell their assets. Indeed, data compiled by Nansen showed that balances of Ether in exchanges dropped to 22.9 million. Tether, the biggest stablecoin in the world, saw outflows worth over $3 billion.
And in a statement, Changpeng Zhao, the founder of Binance warned that FTX’s collapse will have cascading effects in the crypto industry. He warned that the collapse could be similar to the collapse of Lehman Brothers. During the weekend, it was revealed that millions of coins moved from FTX.
The BTC/USD price has collapsed as investors anticipate more revelations and regulations. In the United States, the SEC and the Justice Department have started their investigating the company. As a result, there is a likelihood that regulators will launch new regulations in the industry.
The FTX crisis has overshadowed other positive developments in the financial market. The US dollar index has retreated by more than 7% in the past few weeks. Historically, the US dollar has an inverse relationship with Bitcoin.
BTC/USD forecast
The BTC/USD pair dropped to a two-year low of 15,530 last week. It then recovered and retested the important resistance level at 18,156, which was the lowest level on September 21. A break and retest pattern is usually a sign of a continuation. This rebound was a dead cat bounce.
The pair has moved below all moving averages while the Stochastic Oscillator has moved below the overbought level. Therefore, Bitcoin price will likely continue falling as sellers target the key support at 15,000. A move above the resistance at 18,000 will invalidate the bearish view.
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