Bearish view
- Sell the BTC/USD pair and set a take-profit at 85,000.
- Add a stop-loss at 96,000.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 96,000.
- Add a stop-loss at 87,000.
Bitcoin price held steady on Wednesday morning, rising to its highest point in over three weeks as investors waited for the latest Federal Reserve interest rate decision. The BTC/USD pair rose to 94,900, up modestly from the November low of 80,500.
Bitcoin’s rally happened as investors remained optimistic that the Fed will cut interest rates by 0.25% in this meeting, a move that, in theory, will boost risky assets.
The coin also rose as data showed that futures open interest, while much lower than the year-to-date high, rose by 4%, a sign that investors were starting to deploy leverage. Futures open interest rose to over $134 billion, while Bitcoin bears were liquidated heavily.
Still, the BTC/USD pair faces potential risks ahead. One of them is the fact that market participants are already pricing in the upcoming rate cut, meaning that it may drop after it happens as investors sell the news, which is a common occurrence.
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Another risk is that the ongoing rebound could be part of a dead-cat bounce, a temporary rebound when an asset is in a downward trend.
Bitcoin rally has also been boosted by some recent purchases. Strategy, the accumulation company started by Michael Saylor, announced that it spent over $900 million buying Bitcoin last week. That purchase ruled out the recent worries about it selling its hoard to fund Bitcoin holdings to pay its dividends and debt.
Meanwhile, BitMine, the company associated with Tom Lee continued buying Ethereum, the second-biggest coin in the crypto industry. Lee had maintained a bullish outlook for the crypto industry.
BTC/USD Technical Analysis
The daily timeframe chart shows that the BTC/USD pair has come under pressure in the past few months. Recently, however, it has rebounded from a low of 80,500 on November 21 to nearly 95,000 on Tuesday.
Still, the coin remained below the Supertrend indicator and the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears remain in control.
The pair is also forming a bearish flag pattern, which is made up of a vertical line and a rectangular channel. This pattern normally leads to more downside.
Therefore, the pair will likely have a strong bearish breakdown, potentially to the November low of 80,500. A bullish breakout will be confirmed if it flips that Supertrend indicator from red to green.
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