Bearish view
- Sell the BTC/USD pair and set a take-profit at 60,000.
- Add a stop-loss at 72,000.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 72,000.
- Add a stop-loss at 60,000.
Bitcoin price was stuck in a narrow range on Tuesday morning as the Chinese New Year started and futures open interest dropped to the lowest level since 2024. The BTC/USD pair was trading at 68,500, down sharply from the all-time high of 126,200.
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Bitcoin Price Slips as Demand Wanes
The BTC/USD paid retreated this week as the recovery that started on Friday after the US published the latest US consumer inflation report faded.
Bitcoin is seeing weak demand from investors as evidenced by the ongoing ETF outflows and falling futures open interest. Third-party data shows that spot Bitcoin ETFs have shed over $6 billion in outflows in the past four months, bringing the cumulative total net inflows to $54 billion.
Most importantly, the futures open interest has tumbled from last year's high of over $90 billion to $40 billion. Falling open interest is a sign that investors are not using substantial leverage to execute their trades.
Bitcoin’s futures open interest has been in a strong downward trend in the past few months, a trend that accelerated after the substantial liquidation event on October 10 last year.
The trend will likely continue this month as Chinese traders stay away from the ongoing Chinese Lunar New York celebrations. Historically, this holiday normally leads to low volume as many Chinese remain out of the market.
The next key catalyst for the BTC/USD pair will be the upcoming Federal Reserve minutes of the last monetary policy meeting. These minutes will provide more information on the last meeting and what to expect in the coming meetings.
BTC/USD Technical Analysis
The daily timeframe chart shows that the BTC/USD pair has crashed in the past few months. It has dropped from a high of 126,300 in October last year to the current 68,500.
Bitcoin has dropped below the key support level at $80,117, its lowest level in November last year and the lower side of the bearish flag pattern.
The pair has dropped below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears remain in control. It is now in the process of forming a bearish pennant pattern, which is made up of a vertical line and a symmetrical triangle pattern.
The Percentage Price Oscillator (PPO) indicator has remained below the zero line. Therefore, the pair will likely continue falling as sellers target the next key support level at 60,000, its lowest level this year.
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