Bearish view
- Sell the BTC/USD pair and set a take profit at 53,000.
- Add a stop loss at 59,000.
- Timeline: 1-2 days.
Bullish view
- Set your buy stop at 57,000 and take profit at 60,000.
- Add a stop loss at 55,000.
Bitcoin prices stabilized over the weekend after a strong sell-off last Friday. The BTC/USD pair fell to as low as 53,393 before recovering to above 58,000 on Saturday. It was trading at 57,000 on Monday as traders waited for the next catalyst.
Bitcoin setback fades away
Bitcoin has been under intense pressure over the past few weeks, facing a number of headwinds. First, Bitcoin has not made much headlines in the past few months. The U.S. Securities and Exchange Commission (SEC) has already approved 11 ETFs earlier this year, and the halving occurred a few months ago.
Second, there are signs that Mt. Gox-related wallets have begun to move funds, meaning billions of dollars worth of Bitcoin could be converted into cash in the coming months, leading to an increase in supply.
Third, the German government has begun moving its Bitcoin holdings off exchanges, a sign that sales may soon begin.
Additionally, many Bitcoin mining companies have begun to capitulate and sell their Bitcoin holdings. These events have led to an increase in Bitcoin balances on exchanges, which is a negative sign for the coin.
On the positive side, the release of the US employment and PMI figures last week could signal that the Federal Reserve may begin to cut interest rates later this year, which would be positive for Bitcoin and other risk assets.
Another bright spot is that Joe Biden has pledged to remain in the US presidential race, which is a positive sign as it increases Donald Trump’s chances of winning the presidential election in November. Most crypto traders view Trump favorably on the regulatory front.
BTC/USD Technical Analysis
The BTC/USD pair has formed a huge double top pattern near the 72,000 level over the past few months. Last week, it broke below the neckline of this pattern and dropped to a multi-month low of 53,393.
Bitcoin formed a small hammer pattern on Friday, explaining why it bounced back on Saturday. This bounce was most likely a dead cat bounce, which occurs when a down-trending asset makes a short-term rebound.
Bitcoin remains below the 50-day and 200-day exponential moving averages (EMAs) and the relative strength index (RSI) is below the neutral point of 50. Therefore, the path of least resistance is downwards and the next point to watch is 50,000.
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