Bullish view
- Buy the BTC/USD pair and set a take-profit at 75,000.
- Add a stop-loss at 70,000.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 72,000 and a take-profit at 70,000.
- Add a stop-loss at 74,000.
Bitcoin price made a strong bullish breakout on Monday, continuing a trend that has been going on for more than a year. The BTC/USD pair crossed the important resistance point at 70,000 and hit a record high of over 72,000.
Bitcoin supply problems
The main reason why the BTC/USD pair has been in a strong rally is that there is an ongoing demand and supply imbalance. Demand is rising from both institutional and retail investors after the SEC approved eleven spot Bitcoin ETFs.
The iShares Bitcoin Trust has added over $13 billion in assets in a record time. Other popular funds like FBTC and BRRR have seen more demand from investors.
This trend is happening at a time when there are supply issues. Data shows that the amount of Bitcoins in exchanges has dropped to the lowest point in months. This is a sign that many investors have moved their coins to cold wallets for safety.
At the same time, Bitcoin halving is set to come in April this year. The implications of all this is that Bitcoin’s supply will be curtailed at a time when demand is rising.
Bitcoin is also surging as the fear and greed index rises and as investors embrace the Fear of Missing Out (FOMO). In most cases, Bitcoin tends to rally when many investors are moving into the industry.
In a statement during the weekend, Bill Ackman said that he was considering buying Bitcoin. That would be a big move since he is one of the top hedge fund managers in Wall Street.
Looking ahead, the next important news to watch will be the upcoming US inflation report set for Tuesday. These numbers will provide more information about what to expect when the Fed meets next week. Bitcoin tends to do well when the Fed is moderately dovish.
BTC/USD technical analysis
The BTC/USD pair has been in a strong uptrend in the past few months. It crossed the important resistance level of $50,000 in February. Most recently, the pair has jumped above the resistance points at 60,000 and 70,000, signaling that bulls are in control.
The pair has remained constantly above all moving averages while the Relative Strength Index (RSI) has moved to the extremely overbought point of 87. The same is true with other oscillators like the Stochastic and the MACD.
The Average Directional Index (ADX) has moved to over 60, signaling that the trend is strong. Therefore, the pair will likely continue rising in the coming days as buyers target the psychological point at 75,000.
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