The pair will likely continue falling as sellers target the next key support level at 18,000.
Sell the BTC/USD pair and set a take-profit at 18,500.Add a stop-loss at 21,000.Timeline: 1 day.
Set a buy-stop at 20,500 and a take-profit at 21,500.Add a stop-loss at 19,000.
The BTC/USD price continued to consolidate as investors waited for a catalyst and as the US dollar continued its bullish momentum. Bitcoin is trading at about $19,800, which is lower than last week’s high of about $22,000.
Is Bitcoin Still an Inflation Hedge?
At its peak, Bitcoin was pitched as a good hedge against inflation. However, recent performance has invalidated this thesis. On Tuesday, data publihed by the US Bureau of Labor Statistics (BLS) showed that America’s inflation surged to 9.1% in June.
This increase was the highest it has been in over 40 years. It was also bigger than the median estimate of 8.8%. The bureau attributed this performance to the soaring cost of energy, food and rent. Analysts believe that inflation will remain at elevated level for a while.
Bitcoin has therefore failed the inflation hedge test. That’s because it has dropped by more than 50% in 2022 as inflation has surged to a multi-decade high.
To be fair, other inflation hedges have also underperformed. Gold has fallen to the lowest level since 2020 while American stocks have shed over 20% this year. The only clear winner has been the US dollar, which Bitcoin sought to replace.
The dollar index has surged to the highest level in more than two decades as investors anticipate more and bigger rate hikes by the Federal Reserve. The base scenario is that the Fed will hike by either 0.75% or 1% later this month.
Meanwhile, Celsius paid its last DeFi loan while Voyager Digital unveiled its reorganization plan. The company hopes to restart its business after it went bankrupt recently. Another notable news is that the Securities and Exchange Commission (SEC) delayed its decision on Cathie Wood’s spot ETF. Still, there are worries whether investors will invest in it.
The BTC/USD pair has been in a slow downward trend in the past few days. It has managed to move from 22,500 to below 20,000. As a result, the downward trend is being supported by the 25-day and 50-day moving averages. It is also slightly above the first support of the standard pivot point at 19,000.
Therefore, the pair will likely continue falling as sellers target the next key support level at 18,000. This view will become invalidated if the price moves above the resistance at 20,600.