The pair will likely have a bearish breakout soon.
- Sell the BTC/USD pair and set a take-profit at 28,500.
- Add a stop-loss at 33,000.
- Lead time: 1-2 days.
- Set a buy-stop at 32,200 and a take-profit at 33,500.
- Add take-profit to 30,000.
BTC/USD tried to stabilize during the US and Asian session after falling to its lowest level since July last year. Bitcoin is trading at $31,600, which is slightly above this week’s low of $29,800. So will the US inflation data change sentiment?
Bitcoin tries to stabilize
Bitcoin has been on a steep downtrend over the past few months as investors assessed the new normal when it comes to monetary policy. Investors are aware that the market is in uncharted territory as the Fed hasn’t been this hawkish in years.
The public statement of several Federal Reserve rate setters showed that they continue to support high interest rates. For example, Raphael Bostic said he was in favor of another 0.50% rate hike in future meetings. He opposes a giant increase of 0.75%, proposed by some economists.
The same view was shared by other Fed speakers like Loretta Meister and John Williams. The three, who spoke on Monday, also believe the bank should start shrinking its sizeable balance sheet.
Therefore, the upcoming US inflation data to be released today will provide more insight into the state of the Fed. Economists expect the data to show that the country’s consumer price index (CPI) fell slightly on a monthly and annual basis, respectively.
Meanwhile, Bitcoin stabilized as some notable bulls like Mike Novogratz, Cathie Wood, and the President of El Salvador remained bullish. In a statement, Bukele said the country purchased 500 new bitcoins for around $15 million.
Yet overall, most Bitcoin holders are still in a deficit zone while on-chain metrics are flashing red. For example, Bitcoin’s closely watched accumulation trend score has fallen below 0.2, which is a sign that investors are in a distribution phase.
The BTC/USD pair has seen a strong downtrend over the past few weeks. This decline faded on Tuesday as cryptocurrencies and stocks tried to recover. A closer look shows that it has formed a bearish pennant pattern, which is usually a bearish sign.
The pair remains below the 50-day moving average while the Accumulation and Distribution (A/D) indicator has moved lower. This is a sign that it has moved on to the distribution phase. So, the pair will likely break bearish soon. If this happens, a move below 30,000 cannot be ruled out.