Symmetrical Triangle Pattern Retest
The BTC/USD was closed at $38332.0 after placing a high of $40394.0 and a low of $38332.0. BTC/USD extended its losses on Wednesday and dropped for the second consecutive session amid various negative developments in the market along with the strong comeback in the U.S. dollar. A professor of applied economics at Johns Hopkins University, Steve Hanke, slammed the decision of El Salvador to adopt bitcoin as a legal tender and questioned how bitcoin could function in day-to-day transactions. Hanke warned that the recent adoption of bitcoin as legal tender by El Salvador could completely collapse the economy.
The 78-year-old professor has served as a senior economist under President Ronald Reagan's administration from 1981 to 1982. Hanke has previously said that Bitcoin was a speculative asset with a fundamental value of zero. He has also tweeted that cryptocurrencies are the future of money, but bitcoin is not. Hanke said that BTC holders from regions like Russia and China could now target El Salvador to cash out their holdings that would essentially drain the country of its U.S. dollars. He added that bitcoin has the potential to completely collapse the economy as all the dollars in the country could be vacuumed up, and there will be no money in the country as they do not have a domestic currency. He also questioned the use of bitcoin in day-to-day transactions as the country's citizens rely more on cash transactions. He explained that if one wants to pay a taxi fare in El Salvador with a bitcoin, it would not be possible as about 70% of the people in that country do not even have a bank account. After his comments, bitcoin faced heavy pressure and experienced a selloff for the day.
Furthermore, the central bank of Indonesia revealed its plans to prohibit the use of cryptos for payments in the country. Perry Warjiyo, the apex bank governor, announced that digital assets like bitcoin must not be allowed to other financial services tools. Warijiyo said that cryptocurrencies were not recognized as a legal means of payment by the central bank, so financial institutions must avoid any dealings with the asset class. The central bank has also revealed that it will mobilize teams to enforce the restriction and ensure that institutions comply with the ban. This news also added further pressure on the prices of Bitcoin.
Meanwhile, theU.S. dollar gathered strength across the board on Wednesday after the Federal Reserve announced its monetary policy decision. The U.S. Fed kept its interest rates and QE program unchanged but showed expectations for higher inflation this year. It also projected two interest rates hike in 2023 and supported the U.S. dollar on Wednesday. The DXY reached its highest level since May 5 at 91.43 level and added extra pressure on BTC/USD as both share a negative correlation.
BTC/USD Intraday Technical Levels
Support Resistance
37644.6 39706.6
36957.3 41081.3
35582.6 41768.6
Pivot Point: 39019.3
BTC/USD - Technical Outlook
On Thursday, Bitcoin has shown a slight bearish correction falling from 40,500 level to 38,037 level. However, the closing of the recent Doji candle over 38,037 level is demonstrating the bullish power. It looks like the sellers are exhausted, and buyers are ready to take over. Earlier this week, the BTC/USD pair violated the symmetrical triangle pattern that's now ready to drive buying trends in BTC on a daily timeframe. On the higher side, the BTC/USD can go after 42,150 and 45,379 levels, primarily because of the symmetrical triangle breakout. At the same time, the support levels stay at 39,120 and 37,880. The MACD has crossed over 0 (crossover point), demonstrating solid bullish bias among investors. The 50 periods EMA also supports an upward movement in the BTC/USD. All the best!
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