Bitcoin Could Retest the Support at $2

Bitcoin pulled back after the relatively strong financial results from some of the top American regional banks. 

• Sell the BTC/USD pair and set a take-profit at 27,849.
• Add a stop-loss at 30,500.
• Timeline: 1-2 days.

• Set a buy-stop at 30,000 and a take-profit at 31,000.
• Add a stop-loss at 29,000.

Bitcoin and other cryptocurrencies dropped sharply on Wednesday after the relatively strong US banking results. The BTC/USD pair dropped to a low of 29,277, which was much lower than this month’s high of 31,000.

Bitcoin pulled back after the relatively strong financial results from some of the top American regional banks. On Wednesday, Western Alliance Bank said that its total deposits have jumped in the past few weeks. This was a major surprise since the bank is seen as being a high-risk one after the collapse of Silicon Valley Bank and Signature Bank.

Bitcoin has been moving in a divergent path with banks. The most recent rally gained steam after the collapse of SVB, Signature, and Silvergate Bank. At the time, the thinking was that most Bitcoin and gold offered a better alternative to banks.

Another reason is that the volatility in the banking sector would push the Fed to reconsider its next policy action. Analysts have now penciled another 0.25% hike followed by an extended pause as it assesses the state of the economy. This explains why the US dollar index has crashed by almost 15% in the past few months.

Therefore, the BTC/USD pair dropped as concerns about banks eased a bit, which could give the Fed room to deliver more interest rate hikes.

Bitcoin has been in a strong uptrend this year as it climbed from $15,000 to over $31,000. Now, the BTC/USD pair has retreated and moved to the key support level at 29,200, which was its highest point on March 30 of this year. This means that the pair has formed a break-and-retest pattern, which is a sign of a bullish continuation.

Meanwhile, Bitcoin has moved below the 25-day and 50-day exponential moving averages and the Ichimoku cloud pattern. The Relative Strength Index (RSI) is approaching the oversold level of 30.

Therefore, there are two potential scenarios at this stage. First, the pair could have a bearish breakout and retest the key support at 27,849, the lowest point on April 8. Second, Bitcoin could also bounce back and move back to the highest point this year since it has formed a break and retest pattern.