BTC/USD Signal: On the Cusp of a Bearish Breakout – 26 September 2022
The BTC/USD price continued its consolidation phase during the weekend even as investors continued their fear in the market. Bitcoin was trading at 18,900 on Monday morning, where it has been in the past few days. This price is about 17% below the highest level this month.
Fear and greed index slips
Bitcoin has been in a consolidation phase in the past few days. Since September 19, it has remained between $20,000 and $18,000. This consolidation is notable since it happened in a time when American stocks have crashed to their lowest level this year and the US dollar has surged to the highest point in more than two decades.
At the same time, Bitcoin consolidated as the fear and greed index tumbled to the lowest level in months while the closely watched VIX index jumped to above $32.
The most recent catalyst for Bitcoin and other assets was the hawkish interest rate decision by the Federal Reserve. On Wednesday, the bank decided to hike interest rates by 0.75%. It also hinted that it will continue hiking in the coming months as it continues to battle the elevated inflation.
Bitcoin has also consolidated as government bonds remain more attractive than other assets. The yield of the 2-year government bond rose to above 4% last week. This was the highest level in more than two decades. The benchmark 10-year yield rose to 3.6% while the 30-year has continued rising. Therefore, some investors have rotated from riskier assets like BTC to higher yielding bonds.
The next key catalyst for BTC is the upcoming US consumer confidence data. Economists expect the numbers to show that confidence rose for the second straight month as gas prices remained under pressure. A key challenge among consumers is that mortgage rates and other interest rates are rising.
The four-hour chart shows that the BTC/USD price has been in a consolidation phase in the past few days. It has remained between the standard pivot point and the first support of the standard pivot points.
Bitcoin has moved below the 25-day and 50-day moving average while the MACD has formed a bullish divergence pattern. Therefore, there is a likelihood that BTC will resume the bearish trend as sellers target the next key support level at 17,000. A move above the resistance at 20,500 will signal that there are still more sellers in the market.