Bearish view
- Sell the BTC/USD pair and set a take-profit at 40,000.
- Add a stop-loss at 44,500.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 43,500 and a take-profit at 45,000.
- Add a stop-loss at 41,500.
Bitcoin moved sideways as the recent Bitcoin ETF hype fizzled out. The BTC/USD pair remained unchanged at 42,900, where it has been stuck at since Friday. It has dropped sharply from last week’s high of 49,080.
The recent Bitcoin weakness was expected because the coin jumped sharply before the Securities and Exchange Commission (SEC) approved the spot Bitcoin ETF. It moved from last year’s low of below $20,000 and moved above $40,000. This weakness is happening as traders sell the news and wait for the next catalyst.
The next potential catalyst for Bitcoin will be the Federal Reserve, which hold the next meeting in the next two weeks. This meeting comes at a time when geopolitical risks are escalating as the war in the Middle East continues. On Monday, Houthi rebels struck an American merchant vesel, leading to an increase of crude oil prices.
Shipping costs have continued rising in the past few weeks, with the World Container Index (WCI) jumping to over $3,100. It was trading below $1,400 a few weeks ago as global demand weakened. A combination of high energy prices and shipping costs means that inflation will likely remain at an elevated level.
In addition to spot ETF approvals, Bitcoin also rose because of the rising hopes that the Fed will cut rates as soon as March this year. Now, there are signs that the Fed will cut in May. Last week, the head of Atlanta Fed warned that the bank could also deliver another rate hike.
The other major catalyst for Bitcoin will be the upcoming halving event, which is set for April. In most cases, Bitcoin tends to rally ahead of this event.
BTC/USD technical analysis
The 4H chart shows that Bitcoin has been in a strong bearish trend in the past few days. It has crashed below $49,080 to below $41,000. The pair has formed a bearish flag pattern, which is a popular sign of a continuation. It has moved below the 50-period Exponential Moving Averages (EMA).
Meanwhile, the Relative Strength Index (RSI) has drifted upwards as it continues to consolidate. It has also retreated below the Woodie pivot point. Therefore, the BTC/USD pair will likely continue falling as sellers target the key support at 40,000. The stop-loss of this pair is at 44,500.
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