Drop to 20K likely as recovery fades

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The pair will likely continue to decline as sellers target key support at 20,000.

Bearish view

  • Sell ​​the BTC/USD pair and set a take-profit at 20,000.
  • Add a stop-loss at 23,000.
  • Lead time: 1-2 days.

Bullish view

  • Set a buy-stop at 22,470 and a take-profit at 23,500.
  • Add a stop-loss at 21,000.

BTC/USD retreated to the lowest level in more than a week as last week’s rally faded. Bitcoin fell to a low of $21,805, around 10% below the highest level this month, giving it a market capitalization of over $420 billion.

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Bitcoin is losing momentum

BTC/USD price fell sharply as cryptocurrency prices retreated. Prices for most coins, including Ethereum, Tron, and Near Protocol, have fallen, bringing the total market capitalization of all cryptocurrencies to around $1.06 trillion.

There will be two main catalysts for Bitcoin prices this week. Most important will be the Federal Reserve’s next interest rate decision. With US inflation soaring and the unemployment rate falling to 3.7%, the bank will raise interest rates. Analysts expect the bank to raise rates to as much as 1%.

The Fed will also hint that it will continue to tighten throughout the year. However, analysts believe the Fed will begin a rate-cutting cycle in 2023 in an effort to stimulate an economy that will be hit by higher borrowing costs.

Expectations of rate cuts in 2023 explain why the US dollar has weakened in recent days. Indeed, the dollar index has fallen from this month’s high of $109.30 to the current level of $106.

The BTC/USD price will react to the latest earnings from the biggest US companies like Apple, Microsoft and Alphabet. Although these companies have no stake in Bitcoin, they will affect its price by influencing the broader market.

Historically, Bitcoin has a close correlation with US stocks. Indeed, the current weakness can be attributed to the fact that US stocks have fallen for the past two consecutive days. Analysts expect most of these companies to report lackluster results and report soaring costs of doing business.

BTC/USD forecast

The four-hour chart shows that the BTC/USD pair has been in a strong downtrend for the past few days. It managed to break below the important support level at $22,468 on Monday. This was a notable level since it was the high point on July 8th.

The 25 and 50 day moving averages have formed a bearish cross pattern. The Relative Strength Index (RSI) is approaching the oversold level of 30. Therefore, the pair is likely to continue lower as sellers target key support at 20,000.

BTC/USD

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