Source: PaxForex Premium Analytics Portal, Fundamental Insight
The cryptocurrency market continues its correction, with $500+ billion wiped off the market cap over the past week. As global financial markets extend their losses, driven by high inflation, central bank monetary tightening, ongoing supply chain bottlenecks from the Covid-19 pandemic, and geopolitical conflicts, smart money dumps risky assets led by Bitcoin and Ethereum. It ended comparisons of Bitcoin to gold, which rallied as global tensions rose, while Bitcoin led the crash in risk assets, down 50+% from its latest peak in November 2021.
Oil prices spiked to above $100 per barrel, fueling inflationary pressures and keeping downward momentum on risk assets. The 30,000 level is likely to attract price action in the BTC/USD, with a breakdown to the June 2021 lows just above 28,000 likely. A breakdown below support can accelerate the sell-off into 20,000, and traders should remain patient over the following few trading sessions. As institutional investors shore up cash, they sell non-important assets, where Bitcoin ranks number one.
Bitcoin has been under pressure for several months, and over the past two years, many cryptocurrencies outperformed Bitcoin, as they offer better value, faster transaction times, cheaper costs, and higher scalability. Bitcoin will lose market share, as is Ethereum, as its status of a disconnected asset and a safe haven were proven wrong by real-world events. Rather than thriving during the risk-off period, like gold and silver, Bitcoin became the first victim. Investors should think about what purpose Bitcoin can serve, while traders should exercise caution before rushing to buy the dip.
The forecast for the BTC/USD remains bearish with a pending crossover of the descending Tenkan-sen below the flat Kijun-sen. With the Ichimoku Kinko Hyo Cloud turning sideways, any sell-off from current levels could offer patient investors a longer-term buying opportunity. After the CCI moved into extreme oversold territory, traders should remain cautious, as more downside is likely in the short-term. Can bulls overcome bears and force the BTC/USD into its next horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the BTC/USD remain inside the or breakdown below the 33,970 to 35,510 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 34,835
- Take Profit Zone: 28,720 – 30,925
- Stop Loss Level: 36,920
Should price action for the BTC/USD breakout above 35,510, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 36,920
- Take Profit Zone: 39,360 – 40,185
- Stop Loss Level: 35,510
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
