There is a likelihood that the sell-off will continue on Thursday.
Bearish View
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Set a sell-stop at 38,000 and a take-profit at 36,000.
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Add a stop-loss at 42,000.
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Timeline: 1-2 days.
Bullish View
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Buy the BTC/USD pair and set a take-profit at 45,000.
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Add a stop-loss at 40,000.
The BTC/USD pair bounced back on Wednesday as investors reacted to the relatively weaker US dollar and the executive order by Joe Biden. It then retreated on Thursday morning and is is trading at 39,555, which is about 10% above the lowest point during the weekend.
Cryptocurrency Regulations
Bitcoin and other cryptocurrencies have been in the spotlight in the past few days as investors reflect on the ongoing crisis in Ukraine. In the first place, they have tracked stocks lower as the market volatility increases.
At the same time, there have been concerns about how western countries sanctions will impact the sector. Regulators have warned that many of the sanctioned individuals will turn to digital coins to move their money internationally. For one, many cryptocurrency exchanges have warned that they will not ban their Russian clients.
Another concern is on the potential for a large-scale cyber attack from Russia. Many companies are now boosting their spending on cybersecurity to avoid being targeted. If these ransomware attacks happen, there is a likelihood that payments will be settled in form of cryptocurrencies. This explains why the leading privacy coins like Dash and Monero have rallied sharply this week.
In line with these risks, the BTC/USD pair rebounded after Joe Biden issued an executive order on cryptocurrencies. The order was relatively mild since he asked agencies to assess the industry and come up with regulations. Many analysts believe that regulations will be positive for Bitcoin and other cryptocurrencies because they will lead to more inflows by institutional investors.
The executive order seemed to support this view. In a statement, Biden said that the exploration will lead to the creation of a technology framework that will guide the industry. He said:
“The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate.”
BTC/USD Forecast
The four-hour chart shows that the BTC/USD pair has been in a wide range in the past few weeks. It has found strong resistance at about 45,600 and support at about 33,000. Therefore, we can argue that this rebound does not mean that a new bullish trend has formed since it is inside the range.
The pair erased most of the gains it made on Wednesday and is currently trading at about 39,587. It has moved below the 25-day and 50-day moving averages while the MACD has moved lower. Therefore, there is a likelihood that the sell-off will continue on Thursday. If this happens, the next key support to watch will be at 37,000.