Key Bitcoin Takeaway
- Bitcoin continued its plunge three days in a row as traders awaited the outcome of the Federal Reserve’s policy meeting.
- The BTC/USD exchange rate was relatively steady on Tuesday, wobbling between profits and losses.
- A looming death cross alerts about further downside correction.
Bitcoin sell-off continued for the third day, a sign that traders want to secure their profits after the cryptocurrency established a new milestone high above $61,000 on Saturday.
The flagship cryptocurrency plunged heavily during the Asia-Pacific session on Tuesday but stabilized as it entered the European trading hours. At its intraday low, Bitcoin was trading at $53,221. It rebounded during the US session, now trading at 55,663 as traders await policy signals from the Federal Reserve’s two-day meeting on Tuesday and Wednesday.
Compared to their last gathering in January, the central bank officials meet against a starkly positive economic backdrop in the US. The coronavirus cases are declining, vaccine rollout is accelerating, and Joe Biden’s $1.9 trillion stimulus package has ensured up to $1,400 worth of individual cash benefits to Americans.
Markets have reacted by sending the yields on long-dated Treasuries higher, thereby affecting the so-called pandemic winners by limiting their rallies. Bitcoin is among the assets that performed exceptionally well against lower yields. Now, its bulls expect the Fed to intervene by either expanding its bond-buying program to longer-dated debts or expand it through quantitative easing to accommodate the latter.
Imminent Death Cross
As traders await the Fed officials’ meeting minutes, Bitcoin is threatening to form a Death Cross. In retrospect, a Death Cross occurs when an asset’s short-term moving average slips below its long-term moving average. Traders interpret the crossover as a signal to increase their short exposure in the market. Similarly, spot traders use the cues to sell their physical holdings.
More so, Bitcoin is consolidating inside an ascending channel pattern. A failure to break above its 20-4H exponential moving average and 50-4H simple moving average could have the cryptocurrency test the Channel’s lower trendline as support. If the sell-off continues, the price may retest the 200-4H moving average as the next downside target,
The 200-MA sits near $47,000 as of the time of this writing. That risks sending the Bitcoin prices below $50,000.