On Friday, the personal consumption expenditure (PCE) index report reinforced the view that America’s inflation remains too high.
- Sell the BTC/USD pair and set a take-profit at 22,000.
- Add a stop-loss at 24,500.
- Timeline: 1-2 days.
- Set a buy-stopat 23,800 and a take-profit at 24,500.
- Add a stop-loss at 22,500.
The BTC/USD pair remained under pressure on Tuesday morning as concerns about the Federal Reserve actions remained. Bitcoin pulled back to a low of $23,226, which was a few points below this week’s high of 23,861.
Investors are being concerned about the state of the economy and the next actions by the Federal Reserve. This is after the US published a series of strong economic numbers that pointed to tighter monetary conditions by the Federal Reserve.
On Friday, the personal consumption expenditure (PCE) index report reinforced the view that America’s inflation remains too high. Retail sales have jumped while the unemployment rate moved to 3.4%, the lowest point since 1953.
And on Monday, data by the National Association of Realtors showed that pending home sales rose for the second straight month. It rose by 8.1% in January, the highest level since 2020. This is a sign that the housing market is still resilient despite the rising prices.
Therefore, statements by Fed officials have reinforced the view that tightening is here to stay. Fed hawks like Loretta Mester and James Bullard have supported 50 basis point hike in March. However, the two don’t vote at the FOMC and analysts still expect a three more 0.25% increases.
Bitcoin and other riskier assets have sold-off as investors anticipate more Fed tightening. In a note on Monday, Morgan Stanley’s Mike Wilson warned that the S&P 500 could plunge to about $3,000. Further, the bond market points to more demand for government bonds, which are often seen as being safe investments. Bond yields have held relatively well this year.
The BTC/USD pair retreated slightly in the overnight session as it remained below this month’s high of over 25,000. It has moved below the important psychological level of 24,000. The pair’s bearish view is also being supported by the 25-day and 50-day moving averages. It has also pulled back below the resistance level at 24,280 (Feb 2 high) and formed a small shooting star pattern.
Therefore, the outlook is still bearish, with the next point to watch being at 22,000, which is about 6% below the current level. From the data front, the pair will react to the latest American consumer confidence numbers that will come out on Tuesday. A stronger-than-expected confidence figure will point to more Fed tightening, which will be negative for Bitcoin prices.
