With Rate Cuts Looming, Has Bitcoin Peaked?

Bitcoin (BTCUSD), the pioneering cryptocurrency, finds itself navigating turbulent waters as it trades nearly 10% below its recent peak price.  

Starting the new week on a sombre note, Bitcoin is currently down 6.75% week-to-date, mirroring broader sentiment shifts in the cryptocurrency markets. The recent downtrend in Bitcoin prices can be attributed to a surge in risk-off sentiment spurred by the latest U.S. PMI data.  

The Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) for March revealed a reading of 50.3, signalling expansion in the U.S. manufacturing sector for the first time since September 2022. Furthermore, the ISM Manufacturing Employment sub-index rose to 47.4, indicating strengthening labour market conditions within the sector. This is significant as the manufacturing sector contributes roughly 11% to U.S. GDP, making it a crucial industry. This robust performance led to a re-evaluation of expectations regarding a potential rate cut in June, with the probability dropping from 63.8% to 56.8%. Consequently, the Dollar Index (DXY) surged to its highest level since mid-November, creating headwinds for risk assets like Bitcoin. As Bitcoin grapples with these market dynamics, traders are left pondering its future trajectory amidst evolving economic indicators and shifting sentiment. 


Bitcoin’s recent price action reflects a shift in momentum as it converges with its 100-day moving average after trading above it in an uptrend.  

Initially finding support at the 62258.36 level, Bitcoin faced resistance at 71789.85, struggling to breach this level since March 27th. A sideways consolidation pattern ensued within a rectangle pattern, marked by declining upside volumes near the resistance level.  

This week, a breakdown from the consolidation pattern signalled mounting selling pressures, validated by the price’s descent below the moving average. Currently retracing towards the 61.80% Fibonacci Retracement Golden Ratio, Bitcoin’s movement at this level is pivotal. Should selling pressure persist, a breakdown below this level could lead to a retest of 62258.36 support. Conversely, with oversold RSI conditions, a reversal towards the upside is plausible if the Golden Ratio acts as support, potentially targeting the 100-day moving average as an upside marker, with further bullish momentum aiming for the 71789.85 resistance level.  


As Bitcoin grapples with shifting market sentiment and economic indicators, traders closely monitor key technical levels. Amidst a convergence with the 100-day moving average and pivotal movement around the 61.80% Fibonacci Retracement Golden Ratio, Bitcoin’s future trajectory remains uncertain amidst looming rate cut expectations and evolving market dynamics. 

Sources: CME, Reuters, Visual Capitalist, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

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