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Technical Analysis

BTC/USD Analysis – January 14, 2022

Bitcoin Price Prediction

The BTC/USD closed at $42,562.0 after hitting a high of $44,426.70 and a low of $42,334.0. After two consecutive green sessions, BTC/USD reversed course and turned red on Thursday. The International Monetary Fund (IMF) has recognized that unregulated use of Bitcoin and other cryptocurrencies might cause a domino effect and destabilize global financial markets. The report from the IMF warned about the risks posed by the volatility of cryptocurrencies on economies and stock markets.

During the pandemic crisis, the central banks released an immense amount of cheap money in the form of stimuli to prevent the recession from worsening, which pushed assets like cryptocurrencies to the upside. Wall Street hit all-time highs in 2021, along with the rest of the world’s stocks, which saw a strong recovery. Furthermore, the returns on digital assets also surged to record levels in 2021. The economists from the IMF wrote that the correlation of crypto assets with traditional holdings like stocks had increased significantly, limiting their perceived risk diversification benefits and raising the risk of contagion across the financial markets. According to experts at the IMF, the crypto-equity correlation started with the extraordinary central bank crisis responses of early 2020. Greater investors’ risk appetite and easy global financial conditions pushed higher US stocks and crypto prices. IMF analysts added that the stronger correlation suggests that Bitcoin has been acting as a risky asset, and the increased correlation raises the possibility of spill overs of investor sentiment between those asset classes. This warning from the IMF added a negative impression on BTC/USD prices on Thursday.

Furthermore, a former lawyer for the Pacific island nation of Tonga shared an approach to adopting bitcoin as legal tender. By following in El Salvador’s footsteps, Lord Fusitu’a, a former MP of Tonga, anticipated that his country could adopt Bitcoin by November or December this year. The process was copied from El Salvador’s playbook and is expected to onboard more than 100,000 Tongans onto the Bitcoin network. Tonga is a remote island nation that relies on remittances from countries including Australia, New Zealand, and the United States. The International Finance Corporation estimated that Tonga receives more income from remittances than any other country in the world, contributing up to 30% of household income.

BTC/USD Intraday Technical Levels

Support Resistance
41788.5 43881.2
41014.9 45200.3
39695.7 45973.9
Pivot Point: 43107.6

BTC/USD – Technical Outlook

Bitcoin’s price continued to rise beyond the $43,200 resistance level. Before the bears intervened, BTC even broke beyond the $44,000 barrier twice. The price has since corrected lower after reaching a peak of $44,420. The price fell below the 23.6 percent Fib retracement level of the critical rise from the swing low of $39,660 to the high of $44,420.Moreover, on the hourly timeframe of the BTC/USD pair, there was a breach below a significant bullish trend line with support near $43,250.

If Bitcoin fails to start a new uptrend over $43,200, it may continue to drop. On the downside, there is next support near $42,500. The first significant support is seen as being near $42,000. The 50% Fib retracement level of the important climb from the $39,660 swing low to the $44,420 high is very close to $42,000. A breach below the $42,000 support level might push the price down to $41,500. In the next few sessions, any further losses might drive the price down to the $40,500 support level.