Bearish View

• Sell the BTC/USD pair and set a take-profit at 28,500.
• Add a stop-loss at 33,000.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 32,200 and a take-profit at 33,500.
• Add a take-profit at 30,000.

The BTC/USD attempted to stabilize during the American and Asian sessions after it plummeted to the lowest level since July last year. Bitcoin is trading at $31,600, which is slightly above this week’s low of $29,800. So, will the US inflation data shift sentiment?
 

Bitcoin attempts to stabilize

Bitcoin has been in strong downward momentum in the past few months as investors assessed the new normal as it relates to monetary policy. Investors are aware that the market is in uncharted territory considering that the Fed has not been this hawkish for years.

Public statements by several rate-setters of the Federal Reserve showed that they continued to be supportive of high-interest rates. For example, Raphael Bostic said that he was supportive of another 0.50% rate hike in the upcoming meetings. He is opposed to a giant 0.75% hike, which some economists have proposed.

The same view was shared by other Fed speakers like Loretta Meister and John Williams. The three, who spoke on Monday, also believe that the bank should start trimming its large balance sheet.

Therefore, the upcoming US inflation data that will be published today will provide more guidance on the state of the Fed. Economists expect the data to show that the country’s consumer price index (CPI) declined lightly on an MoM and YoY basis, respectively.

Meanwhile, Bitcoin stabilized as some notable bulls like Mike Novogratz, Cathie Wood, and El Salvador’s president remained optimistic. In a statement, Bukele said that the country had bought 500 new Bitcoins for about $15 million.

Still, in all, most Bitcoin holders are still in a loss-making zone while on-chain metrics are flashing red. For example, the closely watched Bitcoin accumulation trend score has moved below 0.2, which is a sign that investors are in a distribution phase.
 

BTC/USD Forecast

The BTC/USD pair has been in a strong bearish trend in the past few weeks. This decline faded on Tuesday as cryptocurrencies and stocks attempted to recover. A closer look shows that it has formed a bearish pennant pattern, which is usually a bearish sign.

The pair remains below the 50-day moving average while the accumulation and distribution (A/D) indicator has declined. This is a sign that it has moved to the distribution phase. Therefore, the pair will likely have a bearish breakout soon. If this happens, a move below 30,000 cannot be ruled out.

(Click on image to enlarge)