Bearish view
- Sell the BTC/USD pair and set a take-profit at 15,500.
- Add a stop-loss at 17,200.
- Timeline: 1 day.
Bullish view
- Set a buy-stop at 16,945 and a take-profit at 17,800.
- Add a stop-loss at 15,000.
Bitcoin price dropped sharply as fears of a more hawkish Fed coincided with the rising fears of a major recession in the coming year. The BTC/USD price dropped to a low of 16,547, which was much lower than last week’s high of 18,390.
Rising bond yields
The BTC/USD price dropped sharply as a somber mood engulfed the crypto and stock market. In the United States, the Dow Jones dropped by 270 points while the S&P 500 and Nasdaq 100 retreated by over 1%. In the same period, the VIX index rose by 10 basis points.
Meanwhile, bond yields continued rising, with the 10-year and 30-year rising to 3.58% and 3.6%, respectively. The spread between the 10-year and 2-year spread dropped to -69.85. This performance is a reflection that the market expects interest rates will remain at an elevated level for a while.
In its decision last week, the Federal Reserve decided to hike rates by 50 basis points, bringing the year-to-date increases to 450 basis points. The Fed also hinted that it will hike by 0.75% in the first part of the year.
Bitcoin price also declined as the outflows from exchanges continued. Binance, the biggest exchange in the industry has seen its outflows rise to $7.8 billion in the past 30 days. Other exchanges like Bitfinex, OKX, Huobi, and Crypto.com also saw outflows in the past 24 hours. According to CoinGlass, the number of bullish liquidations has risen in the past few days.
The main catalyst for Bitcoin will be the performance of the stock market and the overall mood in the market. According to Alternative.me, Bitcoin’s fear and greed index has dropped to 23, meaning that investors are increasingly fearful about the market.
BTC/USD forecast
The BTC/USD price retreated to a low of 16,560, the lowest level since November 30. It moved below the standard pivot point and the ascending trendline is shown in green. The pair also dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point.
Therefore, it seems like Bitcoin has developed a bearish momentum. Therefore, the pair will likely continue falling as sellers target the key support at 15,500. The stop-loss of this trade will be 17,200.
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