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 42,000.
The BTC/USD pair rose in the overnight session as investors assessed the risks associated with the new Russia sanctions. Bitcoin managed to rise above $40,000 for the first time since February 26th.
Broad Recovery
The BTC/USD pair rose sharply as the risk-on sentiment in the market spread. The rebound coincided with the overall weakness of the US dollar and the strong comeback of American tech companies. The dollar index has moved slightly above the lowest level this week while the Nasdaq 100 index rose by more than 50 points. Other cryptocurrencies like XRP and ETH also continued their recovery.
BTC rose as more people continued to use it to support Ukrainian citizens who are fighting an invasion by Russian forces. Recent data shows that people have sent Bitcoin worth more than $37 million and the amount is expected to keep growing.
Still, there are concerns about how lessons from this crisis will influence future regulations. Already, regulators are looking at ways to ensure that sanctioned individuals are not able to use cryptocurrencies to avoid sanctions. Christine Lagarde has made a case for tightening these regulations.
Some companies are already doing whatever they can to ensure that they don’t offer services to sanctioned people. On Monday, Binance announced that it will remove Russians who have been sanctioned. Still, the biggest challenge is on how to police this situation and ensure that these individuals don’t use proxies to access digital assets.
The performance of Bitcoin was the opposite of what S&P 500 did. The index dropped by more than 40 points on Monday. In the past few months, the two assets have had a correlation coefficient of 0.60. A coefficient of 1.0 is usually a sign that they have a closer correlation.
BTC/USD Forecast
The four-hour chart shows that the BTC/USD pair gained momentum in the overnight session as demand rose. It managed to cross the key resistance level at 41,000 for the first time in more than a week. Also, the pair moved above the key resistance level at 40,340, which was the highest point since the weekend.
The pair has also risen above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is approaching the overbought level of 70. Therefore, the BTC/USD pair will likely keep rising as bulls target the next key level at 43,500.
