Bullish view
- Buy the BTC/USD and set a take-profit at 44,000.
- Add a stop-loss at 39,000.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 39,500 and a take-profit at 38,000.
- Add a stop-loss at 41,000.
The BTC/USD price crashed below the key support at 40,000 on Monday as risky assets sold off. The pair declined to a low of 39,657, which was about 42% below its all-time high. Other altcoins like Ethereum, Solana, and XRP also tumbled.
Risky assets tumble
Bitcoin and other risky assets had a difficult start of the week as concerns about a tighter monetary policy remained. The BTC/USD crash coincided with the sell-off of the tech-heavy Nasdaq 100 index, which declined by over 300 points. This decline pushed the index to a correction zone, which is defined as when it falls by about 10% from its highest point.
By falling by over 40% from its highest point, Bitcoin has moved to double what is considered a bear market and four times what is known as a correction zone.
At the same time, the weakness in cryptocurrencies coincided with another sell-off of government bonds. Bond yields, which move inversely to prices, rose to the highest level in months. In the United States, the 10-year yield rose to 1.79% while the 30-year yield jumped to about 2.13% in the overnight session.
Another key metric was the Bitcoin fear and greed index, which crashed to the lowest level in five months. The general fear and greed index created by CNN Money has also crashed hard in the past few weeks.
The main concern among investors is that the rising bond yields are a sign that the Federal Reserve will keep tightening its policies in the near term. Besides, conditions for a tighter economic policy are still there. For example, inflation has risen to the highest level in decades while the unemployment rate has declined to the lowest level since the pandemic started.
BTC/USD Forecast
The four-hour chart reveals that the BTC/USD pair has been in a strong bearish trend in the past few months. It is trading at 41,690, which is slightly above Monday’s low of 39,657. The pair remains below
the 25-day and 50-day moving averages and the Ichimoku cloud. It is also below the important resistance at 45,855, where it struggled moving below in December.
Therefore, the pair will likely have a relief rally in the near term after it moved below the key support at 40,000. This view will be invalidated if it manages to move below the support at 39,000.
