BTC Moving Lower

The Bitcoin rout continues to deepen on Tuesday with BTC futures now down around 14% from the YTD highs. Following the breakout to fresh record highs last week, BTC has come under sustained selling pressure with futures currently on track to record their fourth consecutive losing day. There has been plenty of chatter recently around whether the current run up in Bitcoin constitutes a bubble, with many commentators warning of an impending crash. Indeed, the current pullback has seen around half a billion in longs liquidated. Notably, net outflows have been recorded among BTC ETFS this week following weeks of record inflows.

Will Sell-Off Deepen?

The sell off has many questioning whether the BTC rally is over and if a 2021/2022 style sell-off is coming? Looking ahead, there are still plenty of reasons to remain bullish on BTC. The upcoming halving event in April is widely expected to be a bullish catalyst in the medium-long term with prior cycles tending towards higher prices over the 6-12 months post-halving. Additionally, the prospect of Fed easing this year should also help support prices.

Fed in Focus

Looking ahead this week, the focus will be on the FOMC tomorrow with the current pullback likely reflecting some profit taking and position adjustment ahead of the event. Put simply, BTC bulls need to hear the Fed signalling expected easing in coming months which should weaken USD and drive risk assets higher. If we hear further pushback from the Fed this is likely to dampen BTC further near-term. Traders should also pay close attention to the dot plot forecasts for any shift in Fed outlook.

Technical Views

BTC

The failure at 74325 has seen the market breaking down below the bull channel lows and back under the 69355 level. Price is now testing the 64540 support and with momentum studies bearish, risks of a downside break are growing. If we do turn lower, 60275 will be next support to note. 

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