Bearish view
Sell the BTC/USD pair and set a take-profit at 75,000.
Add a stop-loss at 81,000.
Timeline: 1-2 days.
Bullish view
Buy the BTC/USD pair and set a take-profit at 81,000.
Add a stop-loss at 75,000.
Bitcoin price pulled back below the important support level of $80,000 as it faced some substantial tailwinds. The BTC/USD pair dropped to 78,176, its lowest point since May 1 and much lower than this month’s high of 82,553.
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Bitcoin Price Falls as Headwinds Rise
The BTC/USD pair retreated as Bitcoin and other altcoins faced some major headwinds. For example, data shows that American investors continued selling the coin last week. Spot Bitcoin ETFs recorded a $1 billion outflow last week, the biggest drop in months. These outflows are signs that these investors are booking profits, and possibly rotating to other assets.
Bitcoin also retreated as the US dollar and government bond yields jumped. Data shows that the US dollar index jumped to near $100, while the 30-year yield jumped to over 5%. The benchmark ten-year yield rose to 4.5% last week.
This price action coincided with macro data showing that US inflation continued rising in April. The headline Consumer inflation jumped to 3.8%, while the producer price index rose to 6.0%.
Higher inflation, coupled with a stronger-than-expected labor market means that the Federal Reserve will likely maintain a highly hawkish outlook. Analysts expect that the bank will not cut interest rates this year.
Bitcoin is also facing other headwinds. For example, Bitcoin treasury companies have reduced their accumulation, with Strategy being the only one buying. Also, Donald Trump has not implemented the Strategic Bitcoin Reserves as he promised last year.
The next important catalyst for Bitcoin and other assets will be the upcoming Federal Reserve minutes on Wednesday. These minutes will provide more information about the state of the economy and what to expect later this year.
BTC/USD Pair Forecast
The daily chart reveals that the BTC/USD pair has retreated in the past few days. It has dropped from 82,553, its highest point this month, to the current 78,110.
The coin has moved below the lower side of the rising wedge pattern, a common bearish reversal sign. It has also dropped below the 25-day moving average and is now nearing the 23.6% retracement level.
Therefore, the pair will likely continue falling in the near term, potentially to the psychological level at 75,000. A move below that level will point to more downside, potentially to 70,000. On the other hand, a move above the resistance at 82,550 will invalidate the bearish outlook.