The outlook of the Bitcoin price at this stage is neutral with a bearish bias.
Sell the BTC/USD pair and set a take-profit at 36,000.Add a stop-loss at 40,000.Timeline: 2 days.
Set a buy-stop at 39,000 and a take-profit at 41,000.Add a stop-loss at 37,000.
The BTC/USD remained rangebound on Tuesday morning as investors watched the rising US Treasury yield and the upcoming Fed decision. It is trading at 38,980, where it has been in the past few days.
US Treasuries Rise
Bitcoin has been under pressure in the past few days as investors react to multiple market forces. First, the crisis in Ukraine has led to a sector rotation from Bitcoin to gold. Indeed, while Bitcoin funds have seen outflows recently, gold has seen significant inflows. This is an indication that investors believe that gold is a better safe haven than Bitcoin.
Meanwhile, the BTC/USD has struggled as US Treasury yields have risen. The 10-year yield rose to 2.15%, which was the highest it has been in almost two years. The same trend was seen in the 30-year and 5-year yields.
This performance is likely because of the rising optimism that the Federal Reserve will embrace a more hawkish tone this week. While there are recession risks in the US, the bank’s committee will likely agree that inflation poses a bigger risk currently. Data published last week showed that the American consumer price index jumped to a multi-decade high of 7.9%.
Historically, risky assets tend to underperform value ones in a period of high-interest rates. This explains why the Dow Jones index has outperformed the Nasdaq 100. For example, while the Nasdaq 100 index crashed by 150 points on Monday, the Dow added over 200 points.
A key reason why Bitcoin has not fallen further is that large holders are not selling. In a statement during the weekend, Elon Musk said that he was not exiting his stakes in Bitcoin, Ether, and Dogecoin. Similarly, MicroStrategy has said that it won’t sell its large holdings. Still, the challenge is that institutional investors are not buying either.
The four-hour chart shows that the BTC/USD pair has been in a wide range in the past few weeks. It has struggled moving below 30,000 and above 45,000. On the four-hour chart, the pair is slightly below the 25-day and 50-day moving average.
The pair is also along the standard pivot point and slightly above the key support level at 37,500, which was the lowest level on Monday.
Therefore, the outlook of the Bitcoin price at this stage is neutral with a bearish bias. A break below the support at 37,500 will lead to more weakness.