Bearish View
- Sell the BTC/USD and set a take-profit at 40,000.
- Add a stop-loss at 48,000.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 45,500 and a take-profit at 48,000.
- Add a stop-loss at 43,000.
Bitcoin joined American stocks in a major slump as investors continued to worry about the hawkish Federal Reserve. The BTC/USD pair declined to a low of 43,570, which was about 10% below the highest point in March.
Bitcoin Retreat Continues
Bitcoin had a strong March as investors bought the dip. It managed to rise to a multi-month high of 48,200 from the year-to-date low of 34,365. This strength has faltered in April as investors continued to worry about the Federal Reserve and the yield curve.
Several Fed officials have said that they will support hiking interest rates by 0.50% in the upcoming meeting in May. Some members like Lael Brainard said that they would support quantitative tightening (QT). QT is a process where the bank starts to wind down its giant balance sheet.
Analysts believe that most assets that did well during the Fed’s easing process will underperform when it starts to reduce its balance sheet. Bitcoin, altcoins, and stocks were among the top beneficiaries of the easing process. Therefore, like Bitcoin, American indices like the Nasdaq 100, Dow Jones, and S&P 500 indices have dropped in the past few consecutive days.
The BTC/USD pair declined even as on-chain data showed that whales were either buying more or maintaining their holdings. MicroStrategy, one of the biggest Bitcoin holders, announced that it will continue buying the coins.
Similarly, the Terra Foundation said that it would buy BTC worth $10 billion to back its stablecoins. However, smaller Bitcoin holders have exited their holdings with balances in exchanges falling.
Meanwhile, Mike Novogratz, one of the biggest Bitcoin proponents, said that BTC will continue doing well even amid a hawkish Fed. He was speaking at a cryptocurrency conference in Miami. Still, some investors are concerned that the recent breakout was actually a fakeout.
BTC/USD Forecast
The BTC/USD pair rejected the important support of 45,000 as worries of the Fed remained. It managed to drop below the important support level at 45,505, which was the highest point on March 2. The pair also declined below the 25-day and 50-day moving averages. The two have even formed a bearish crossover.
It also declined below the support at 44,228, which was the lowest level on April 1. The Relative Strength Index (RSI) has also moved below the oversold level. Therefore, the pair will likely keep falling as bears target the support at 40,000.
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