Bearish View
- Sell the BTC/USD pair and set a take-profit at 35,000.
- Add a stop-loss at 40,000.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 39,000 and add a take-profit at 42,000.
- Add a stop-loss at 37,000.
The BTC/USD pair crashed to the lowest level since March 2022 as global risks rose and investors continued being fearful. It is trading at 38,480, which was about 20% below the highest level this month. Other digital coins like Ethereum and Ripple also declined while the total market cap of cryptocurrencies fell to about $1.88 trillion.
Fear Escalating
Investors are getting more fearful as global risks increase. The Bitcoin fear and greed index dropped to the extreme fear zone of 26, signaling that investors are getting extremely fearful. At the same time, the fear and greed index tracked by CNN Money has also dropped to the extreme fear zone as volatility rose.
The performance of Bitcoin also correlates with that of technology stocks. The Nasdaq 100 index dropped by more than 300 points on Monday. The other leading American indices like Russel 2000 and Dow Jones also retreated.
Investors are generally fearful that the Federal Reserve will become more aggressive because of the rising inflation and the sense that the American economy is too hot. The market now expects that the Fed will deliver at least six rate hikes this year.
The BTC/USD pair declined even after Elon Musk announced that he will buy Twitter, one of the biggest social media companies in the world. There are concerns about whether the deal will go through. For one, Twitter shares crashed by more than 4% to $49.86, which is lower than Musk’s offer price of $54. In such a deal, one would expect the stock to hit its strike price.
One of the top concerns is that China will have leverage over Elon Musk because Tesla relies on Chinese batteries. China is also its biggest market. Therefore, it could seek more censorship. Meanwhile, Bitcoin fell even after Fidelity launched a product that will let users invest 205 of their retirement in Bitcoin.
BTC/USD Forecast
The BTC/USD pair crashed hard as the rest of the financial market declined. The pair dropped to 38,000, which was the lowest point in more than a month. It has moved below the 25-day and 50-day moving averages and the important support at 38,555. The MACD has moved below the neutral level. Therefore, the path of the least resistance for the pair is lower, with the next key support being at 35,000.
