Bearish view
- Sell the BTC/USD pair and set a take-profit at 100,470.
- Add a stop-loss at 110,000.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 110,000.
- Add a stop-loss at 100,470.
Bitcoin price retreated below the important support level at $105,000 as the crisis in the Middle East escalated. The BTC/USD pair retreated to a low of 104,000, down by 6.60% from its highest point this year.
Geopolitical Risks Rise
The BTC/USD exchange rate retreated as investors remained concerned about the situation in the Middle East, where the situation between Iran and Israel has escalated.
Donald Trump left the G7 meeting earlier and moved back to the White House, where he chaired the national security council meeting. He also warned that he wanted Iran to surrender and that he was open to eliminating Iran’s Supreme Leader.
These fears have led to higher crude oil prices, with Brent, the global benchmark, rising to $76.60 and the West Texas Intermediate (WTI) moving to $73.60. This trend could continue if Israel continues targeting Iran’s oil infrastructure.
Higher oil prices will lead to higher inflation at a time when companies are dealing with higher tariffs from the United States. This, in turn, could lead to stagflation, a situation characterized by slow economic growth and high inflation.
These events are happening at a time when the Federal Reserve is set to deliver its interest rate decision. Economists expect the bank to leave interest rates unchanged as it has done in all meetings this year.
The BTC/USD pair will do well if the Federal Reserve turns dovish in this meeting.
On the positive side, there are signs that Bitcoin is having strong demand, especially from American investors. Data shows that spot Bitcoin ETFs have had inflows in the last seven consecutive days, bringing the cumulative total to $46 billion.
The other positive is that Bitcoin does well after major geopolitical events such as the war between Ukraine and Russia.
BTC/USD technical analysis
The daily chart shows that the BTC/USD pair has come under pressure after forming a double-top-like pattern at 110,435. A double-top is one of the most bearish patterns in technical analysis, and Bitcoin is nearing the important neckline at 100,470.
The MACD and the Relative Strength Index (RSI) have continued pointing downwards. Therefore, the BTC/USD pair may continue falling as sellers target the neckline at 100,470. A move above the resistance at 110,435 will invalidate the bullish view.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
