There is a likelihood that the Bitcoin price will break out lower in the near term.
- Set a sell-stop at 41,500 and a take-profit at 40,000.
- Add a stop-loss at 42,500.
- Timeline: 1-2 days.
- Set a buy-stop at 43,500 and a take-profit at 45,000.
- Add a stop-loss at 42,000.
The BTC/USD pair remained under pressure as investors waited for the next catalyst for the cryptocurrency. The pair is trading at 42,545, which is a few points below the overnight high of 44,378. This price is also about 20% below the highest level this month.
Demand Remains Steady
Bitcoin has been in a consolidation mode in the past few weeks. The biggest news during this period was that China was banning all transactions. At the same time, the country ordered foreign companies to stop providing crypto services to Chinese citizens.
As a result, companies like Huobi announced that they would bar Chinese citizens from creating accounts in its platform. It will also retire existing accounts by the end of the year.
Still, there are signs that some institutional investors bought the dip that happened after the Chinese news. Data shows that crypto products recorded more inflows last week. This was the six straight week of more inflows in these products.
For example, Morgan Stanley, one of the best-known names in Wall Street, announced that it had acquired more shares in Greyscale Bitcoin Trust. The company’s Opportunity Fund bought shares worth about $2.4 million last week. It also owns other stakes in crypto companies. The Grayscale Bitcoin Trust is one of the most common methods to invest in Bitcoin among institutional investors.
The BTC/USD pair will next react to macro issues from the United States. First, some Federal Reserve officials have hinted that the bank needs to start tapering its asset purchases soon. In a statement on Monday, New York Fed president said that tapering should start as soon as possible. Later today, Fed Chair Jerome Powell will answer questions about this.
Second, there is a possibility that the US will default on its debt obligations after Senate Republicans blocked a bill seeking to fund the country’s debt ceiling.
The four-hour chart shows that the BTC/USD pair has been in a tight range in the past few days. The pair is trading at 42,545, where it has been recently. It is slightly below the 25-day and 50-day moving averages. At the same time, it has formed a bearish pennant pattern, which is usually a bearish sign. The Stochastic Oscillator has also declined. Therefore, there is a likelihood that the price will break out lower in the near term.