Bitcoin (BTCUSD) has recently taken centre stage with the U.S. Securities and Exchange Commission’s approval of a Spot ETF, injecting fresh dynamics into the cryptocurrency landscape.
Despite briefly surpassing 2023’s high, the BTCUSD has retreated, marking a 4.50% year-to-date dip. This pullback is attributed to the steadfastness of the Greenback, fortified by robust U.S. economic data. In addition, the anticipation of the Federal Reserve maintaining high rates for longer has added to the downward pressure on BTCUSD.
The U.S. economy’s resilience, evident in a significant December inflation uptick to 3.4% and positive retail sales, swiftly reduced the probability of a March rate cut from 77% to 44% within a week, bolstering the dominance of the Greenback. As the spotlight turns to this week’s Federal Reserve’s PCE Price Index release, the trajectory of BTCUSD remains closely intertwined with broader economic indicators and the evolving landscape of digital currency markets.
Technical
The current BTCUSD landscape reveals a prevailing downtrend, with the cryptocurrency trading below the influential 100-day moving average.
Notably, the $49102.29 level has emerged as a formidable resistance point, marked by a sharp selloff triggered by overbought RSI conditions. Presently, the BTCUSD has retraced to test support at the $40625.68 level, established early in 2024.
The support level, coupled with oversold RSI conditions, hints at a potential reversal on the horizon. Should buyers outweigh sellers, the 100-day moving average aligned with the 38.20% Fibonacci Retracement level could become a focal point for an upside convergence. However, a high volume breakdown below the support level could signal heightened selling pressure, potentially testing the psychological $40000.00 level.
Summary
Bitcoin faces headwinds, posting back-to-back weekly losses amid Greenback strength and tempered Federal Reserve rate cut expectations. Trading below the 100-day moving average, BTCUSD’s pivotal $49102.29 resistance, marked by an overbought RSI, triggered a selloff, suggesting market challenges. With oversold RSI conditions currently prevailing, a potential reversal at the $40625.68 support hinges on buyer momentum. The 100-day moving average, if breached, could signal upside potential, while a breakdown might test psychological support at $40000.00.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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