Bearish View
- Set a sell-stop at 34,000 and a take-profit at 32,000.
- Add a stop-loss at 36,000.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 35,000 and a take-profit at 37,000.
- Add a stop-loss at 33,000.
The BTC/USD pair declined in early trading as traders started to position themselves for the new month. The pair declined to 34,298, which was about 6.5% below the highest point this week. This brings its total market capitalization to more than $644 billion, according to CoinMarketCap.
Institutional Demand Falls
Bitcoin has struggled lately partly due to the relatively lower institutional demand. According to Glassnode, the number of institutional investors buying the coin has declined substantially recently. This is a sharp reversal from what happened in 2020 and early this year when institutions led the purchases.
This trend is mostly because of the recent sell-off that has seen the coin’s price drop from more than $65,000. Also, there are concerns about the energy used to mine Bitcoin. With most institutions embracing environmental, social, and governance (ESG) issues, there are concerns that many of them are not interested in the coin. This is because a substantial amount of Bitcoin is mined using fossil fuels.
The BTC/USD is also struggling as investors reflect on the ongoing crackdown in China. Recently, the government is cracking down on mining operations in the c0untry. As such, analysts believe that it will take longer for Chinese miners to go to other supportive countries. Also, the People's Bank of China (PBOC) has already asked banks and other fintech to crackdown on the sector more.
Looking ahead, the BTC/USD will next react to the latest US non-farm payrolls that will come out on Friday. These numbers are expected to show the strength of the country’s labor force. Strong numbers will provide a signal that the American economy is strong. As a result, it will lead to speculation about the tightening by the Federal Reserve.
BTC/USD Technical Analysis
The four-hour chart shows that the BTC/USD pair rose to a high of 36,680 this week. It then declined and is currently trading at 34,298. The pair is at the same level as the 25-day and 15-day exponential moving averages (EMA). Notably, it also seems to be forming a small head and shoulders pattern that is usually a bearish signal. Therefore, there is a likelihood that the pair will keep falling as institutional and retail appetite wane. This will likely see it drop to about 33,000. On the flip side, a move above this month’s high of 36,680 will invalidate this trend.
