Bearish view
Sell the BTC/USD pair and set a take-profit at 70,000.
Add a stop-loss at 80,000.
Timeline: 1-2 days.
Bullish view
Buy the BTC/USD pair and set a take-profit at 80,000.
Add a stop-loss at 70,000.
Bitcoin price retreated sharply and moved below the important support at $75,000 as demand continued waning. The BTC/USD pair dropped to 74,900, down by 10% from its highest point this month, meaning it is in a correction.
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Bitcoin Price Falls as Traders Rotate to AI and Space Assets
One main catalyst for the ongoing Bitcoin price retreat is that investors have continued dumping their ETF holdings. Data shows spot Bitcoin ETFs have had outflows in the past nine consecutive days. They have shed $333 million in assets this week, down from $1.2 billion last week and $1 billion a week earlier.
These ETFs have shed over $1.34 billion this month, erasing the gains made last month. They now have a cumulative total inflows of over $56.7 billion in assets, down from over $66 billion.
There is a likelihood that some of these funds are moving to the stock market. For example, stocks ETFs have added billions of dollars this year, which has helped key indices like the Dow Jones and Nasdaq 100 soar to a record high.
Specifically, investors have moved to companies in the artificial intelligence (AI) and space companies. AI companies have surged this year because of the upcoming OpenAI IPO, which will happen later this year. On the other hand, companies in the space industry have surged ahead of the SpaceX IPO.
Bitcoin price will react mildly to the upcoming US consumer inflation report. Economists expect the report to show that the headline inflation jumped in April this year. A higher inflation rate may push the Fed to hike interest rates.
BTC/USD Technical Analysis
The daily chart shows that the BTC/USD pair has slumped in the past few days, moving from a high of 82,767 earlier this month to the current 74,880. It has already moved below the lower side of the rising wedge pattern, a common bearish reversal sign in technical analysis.
The pair has slumped below the 50-day moving average. Also, the two lines of the Percentage Price Oscillator (PPO) have moved below the zero line. Therefore, the most likely scenario is where the BTC/USD pair continues falling, potentially to the key support level at 70,000.
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