Bearish view
- Sell the BTC/USD pair and set a take-profit at 80,000.
- Add a stop-loss at 94,000.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 93,955.
- Add a stop-loss at 80,000.
The BTC/USD pair crashed to the lowest level since November last year as it exited a two-month consolidation. Bitcoin price fell to a low of $85,650, down by over 20% from its highest level this year, meaning that it is now in a bear market.
The BTC/USD plunged as the market confronted substantial risks in the global economy. One of the top risks is that Donald Trump has signaled that he is serious about implementing tariffs on American imports.
Trump hopes that these tariffs will push more companies to invest in American plants, which will help reduce the deficit. He also hopes that the money collected from tariffs will help to offset the deficit created by his tax cuts.
High tariffs will likely lead to more inflation in the US, a move that will push the Federal Reserve to maintain high interest rates in the country. Bitcoin and other assets like stocks underperform the market when the Fed has embraced a highly hawkish tone.
Bitcoin will next react to the upcoming NVIDIA earnings, which will set the tone for the stock and crypto market. Strong earnings may help to boost confidence in the market and push crypto prices lower.
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BTC/USD technical analysis
The daily chart shows that the BTC/USD pair has been in a consolidation phase in the past few months. It formed a double-top chart pattern at 108,440, and has now moved below the neckline at 89,136, its lowest swing on July 13.
The pair has dropped below the 50-day and 100-day Exponential Moving Averages (EMA). The MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) is nearing the oversold level of 30.
Bitcoin has also lost the ultimate support of the Murrey Math Lines indicator. Therefore, the path of the least resistance will be downwards, with the next point to watch being at 73,725, the highest level in March 2024.
The alternative scenario is where the BTC/USD pair bounces back and retests the 100-day moving average at 93,950.
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