BTC/USD Forex Signal: Bearish Pennant Points to More Pain

Bitcoin struggled to find buyers as concerns about contagion in the crypto industry continued.

Bearish view

  • Sell the BTC/USD pair and set a take-profit at 15,000.
  • Add a stop-loss at 17,200.
  • Timeline: 1-2 days.

Bullish view

  • Buy the BTC/USD pair and set a take-profit at 18,000.
  • Add a stop-loss at 15,500.

The BTC/USD price continued wavering on Thursday as the fallout of FTX’s crash continued. It was trading at 16,528, which was slightly below this week’s high of 17,166. Bitcoin has plunged by more than 23% from its highest level this month.

Silver lining of the FTX crash

Bitcoin struggled to find buyers as concerns about contagion in the crypto industry continued. On Wednesday, a crypto lending unit of Grayscale halted its withdrawals. 

The company, known as Genesis Global Capital, had over $2.8 billion in active loans at the end of the quarter. It also suspended redemptions and loan origination. Genesis is owned by Digital Currency Group, a company that owns several brands, including CoinDesk.

Investors believe that FTX’s crash will lead to significant contagion risks around the world. For example, the collapse of Terra led to bankruptcies like Celsius and Voyager Digital.

On a positive side, there is a likelihood that this collapse will lead to changes in the crypto industry. For example, after the collapse of Lehman Brothers, Congress passed the Dodd-Frank bill that tightened the screws of the financial sector.

America’s banks like Goldman Sachs and Morgan Stanley are now more capitalized and are in a better shape than they were. They are regularly subjected to regular stress tests by the Federal Reserve. Similar rules could be applied in the crypto industry.

The challenge will be on how to pass the bill considering that the recent midterms led to a more tight congress.

The BTC/USD pair will react to any new developments in the crypto industry. It will also react mildly to several economic data from the United States. The statistics agency will publish the latest building permits and housing starts data. Another important data will be the Philadelphia Fed manufacturing index. Fed officials like James Bullard and Michelle Bowman will also speak.

BTC/USD forecast

The four-hour chart shows that the BTC/USD price has been in under pressure in the past few days. It has moved below the 50-day moving average and is between the lower and middle lines of the Bollinger Bands.

The pair has also formed a bearish pennant pattern that is shown in black. Meanwhile, the Relative Strength Index (RSI) has moved below the neutral point at 50 while the Awesome Oscillator is at the neutral level.

Therefore, the pair will likely have a bearish breakout as sellers target the key support at 15,000. A move above the resistance at 17,000 will invalidate the bearish view.

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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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