The hourly chart shows that the BTC/USD pair has drifted downwards in the past few days.
- Sell the BTC/USD pair and add a take-profit at 25,765.
- Add a stop-loss at 26,700.
- Timeline: 1-2 days.
- Set a buy-stop at 26,367 and a take-profit at 27,500.
- Add a stop-loss at 25,500.
Cryptocurrencies and stocks dropped as concerns about the American economy continued. The BTC/USD pair dropped to a low of 26,162 on Thursday morning, lower than this year’s high of $31,000. Similarly, the Dow Jones and Nasdaq 100 indices dropped by more than 0.50%.
The main reason why the BTC/USD pair dropped was the ongoing concerns about the American debt limit issue. Democrats and Republican negotiators have struggled to come up with a solution to keep the government funded in the coming days.
As a result, there are concerns that the US, which holds over $31 trillion of debt, could default in the coming months. Historically, bitcoin tends to drop when there are elevated risks in the American and global economies.
In s report, Fitch, a rating agency, said that it had placed the country’s triple-A credit on “rating watch negative.” Despite this, the agency believes that the US will reach a debt ceiling deal to prevent a default, which will have major implications of the economy.
The BTC/USD pair dropped as the US dollar index (DXY) jumped as investors embraced a rik-off sentiment. After falling below $101 this month, the dollar index jumped to over $104 on Thursday. Historically, the dollar rises when the market is afraid about the economy.
Meanwhile, the crypto market is seeing low volume and volatility as demand for the coins fade. According to CoinMarketCap, the 24-hour volume of BTC trades came in at $16.7 billion.
The hourly chart shows that the BTC/USD pair has drifted downwards in the past few days. It has faced substantial resistance at 27,655, where it failed to move above on March 15. The pair has also moved slightly below the 50-period moving average and the Ichimoku cloud indicator.
It has also dropped below the crucial support level at 26,367, the lowest point on May 18. Further, the pair has moved below the 23.6% Fibonacci retracement level. Therefore, the outlook of the pair is bearish as the debt limit crisis continues. If this happens, the next level to watch will be at 25,765, the lowest point on May 12.
The pair will likely bounce back when Republicans and Democrats reach a debt ceiling deal. I expect it to happen before the June 1 deadline.
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