After the week’s pullback from the peak of a strong rally at $22,800 to a low of $19,305, Bitcoin (BTC) is still steady and holding near strong support at $20,000. The BTC/USD bulls are starting to take the lead at the time of analysis, with the price trading at an intraday high of $20,183. BTC must rise above the $22,000 psychological level to maintain its bullish stance and focus on the upside. A substantial decline below $19,000 might bring back downward sentiment, as it did in August. So far, the bears in Bitcoin have yet to fully assert that they are in control above the $20,000 level. The US inflation report, which has now revived expectations that the Fed will stay on track for another 0.75% hike, is the cause of the pair’s decline. There are also some hints that the Fed might be even more aggressive at its policy meeting next week. Since the Fed’s policies are putting so much pressure on the US stock market, Bitcoin has developed a strong correlation with it. The No. 1 cryptocurrency no longer functions as an inflation hedge but rather as a risky asset. It is important to point out that BTC’s correlation with the US stock market reached an all-time low in August. However, Bitcoin continues to wobble on its rising correlation with stocks, according to TradingView. Analysts point out that once the correlation index rises above 0.5, there is a strong correlation between the cryptocurrency market and the stock market.
Key Levels
Resistance Levels: $28,000, $25,000, $22,000
Support Levels: $20,000, $18,000, $15,000
BTC/USD Daily ChartThe BTC/USD pair bounced off lows near $19,305 on Friday after falling for three days. The rebound of the pair had reached an intraday high of $20,183 at the time of this post and was circling near the $20,000 level. As traders respond to inflation data, which would determine the next movement, Bitcoin is in a cautious mode. At the recent low of $19,305, Bitcoin’s attempt to strengthen against the USD has gained traction.
The pair has gained nearly $700 since finding support near the $19,000 level, the previous day’s low level. To balance the overall forecast, the BTC/USD pair needs to break through the $22,000 resistance level. The medium-to-long-term analysis keeps pointing to the daily moving average (MA 50) as the area where the BTC/USD downside bias ends and the beginning of its upward rebound.
BTC/USD 4-Hour ChartAs the BTC/USD pair continues to consolidate towards the round number at $21,000, it has added new gains of nearly 2% to $20,183 at the time of this post. However, the sustained trading above $20,000 must lead to a crossover of the 4-hour moving average (MA 50) over the MA 200 for the quote, along with a strong relative strength index (RSI) shifting into the overbought region, to indicate bulls’ return.
The run-up from the week’s low of $19,305 attracts buyers and might increase the entry for low-buyers. However, the September 13 highs near $22,800 may then present a challenge to BTC/USD buyers. On the other hand, a downside break of the lower horizontal level near $20,000 will be met with an additional challenge for the BTC/USD sellers to overcome at $19,000.
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