Bullish View
- Buy the BTC/USD pair and set a take-profit at 17,500.
- Add a stop-loss at 16,400.
- Timeline: 1-2 days.
Bearish View
- Sell the BTC/USD pair and set a take-profit at 15,500.
- Add a stop-loss at 17,000.
The BTC/USD price tilted upwards in the first few days of the year amid rising optimism in the crypto industry. Bitcoin rose to a high of $16,763, which was the highest point since December 28 of this year. It has risen by about 2% from its lowest point in December.
Bitcoin Drifts Upwards
The BTC/USD exchange rate has risen slightly in the past few days as optimism in the sector rose. These gains came after Bitcoin concluded its worst year since 2018. It dropped by more than 65% and managed to outperform some of the best-known stocks in Wall Street like Tesla and Cathie Wood’s Ark Innovation Fund.
Bitcoin struggled in 2022 for several reasons. First, inflation in the US and other developed countries surged to the highest level in more than 4 decades. Russia’s invasion of Ukraine and tight supply chains played a role in this inflationary pressure.
Second, the Federal Reserve embraced its most hawkish tone in years. It delivered a series of rate hikes, including four 0.75% increases. In total, the bank hiked by 450 basis points and started to reduce its balance sheet through quantitative tightening policies. High-interest rates led to a weak performance across asset classes, including bonds and stocks.
Finally, BTC reacted to the implosion of key players in the sector like Terra, FTX, Voyager Digital, Celsius, and BlockFi. These collapses led to elevated fears of contagion in the crypto industry. As a result, many crypto investors exited their positions, which led to significant outflows from leading exchanges.
The BTC/USD price will be driven by regulations in the crypto sector and the actions of the Fed. Analysts believe that the Fed will start to pivot in the coming months if inflation shows more signs of cooling.
BTC/USD Forecast
The BTC/USD price has tilted upwards in the past few days. As it rose, it moved slightly above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the overbought level. The Stochastic Oscillator has moved to the overbought level.
It has also formed a small inverted head and shoulders pattern. Therefore, the pair will likely continue rising as buyers target the key resistance point at 17,500. A drop below the support at 16,000 will signal that there are still more sellers in the market.
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