Bearish View
- Sell the BTC/USD pair and set a take-profit at 19,500.
- Add a stop-loss at 22,000.
- Timeline: 1 day.
Bullish View
- Set a buy-stop at 21,500 and a take-profit at 22,500.
- Add a stop-loss at 20,000.
The BTC/USD pair retreated sharply as concerns of the soaring interest rates and the new Coinbase investigation rose. Bitcoin dropped to $20,500, which was about 15% below the highest level last week. It has dropped to the lowest point since July 18th of this year.
Cryptocurrencies Sell-Off
The BTC/USD pair continued its sell-off as investors during the Asian session. This decline coincided with the overall performance of the stock market amid the disappointing earnings. Some of the top companies that published weak results were General Motors, Microsoft, and Kimberly-Klark.
As a result, the Dow Jones, Nasdaq 100, and S&P 500 indices declined by more than 1.50%. This trend could continue as tens of large companies are expected to publish their results this week. In fact, about half of all firms in the S&P 500 index are expected to release their results this week. In the past few months, there have been a correlation between stocks and Bitcoin.
The BTC/USD pair also declined after the US dollar and Treasury yields rose ahead of the interest rate decision by the Federal Reserve. The bank is expected to deliver another rate hike as it continues to battle the rising inflation. Most analysts are pricing in a 0.75% interest rate hike. Historically, Bitcoin tends to underperform in a period when the Fed is hiking rates.
Bitcoin also retreated after news that the SEC was investigating Coinbase, one of the biggest companies in the industry. According to Bloomberg, the commission is investigating the firm for letting American investors trade and invest in products it believes to be securities.
Coinbase has denied the allegations and said that it vets all assets it offers in its platform. The news came a day after the SEC charged a former senior executive for insider trading. Coinbase stock dropped by 15% on Tuesday.
BTC/USD Forecast
The four-hour chart shows that the BTC/USD pair has been in a strong sell-off in the past few days. The pair has moved to the lower side of the Bollinger Bands. It has also moved below the 25-day moving average while the Relative Strength Index (RSI) has continued falling.
The pair has also formed an ascending channel that is shown in blue. Therefore, the pair will continue falling as sellers target the next key support at 19,500. A rebound cannot be ruled out after the latest FOMC decision.
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