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Bearish View
- Sell the BTC/USD and set a take-profit at 25,470.
- Add a stop-loss at 30,000.
- Timeline: 1 day.
Bullish View
- Set a buy-stop at 29,525 and a take-profit at 32,000.
- Add a stop-loss at 27,000.
The BTC/USD crashed below the support at 30,000 as demand for cryptocurrencies waned. The coin dropped to a low of 27,830, which was the lowest level in eleven months. It has crashed by more than 60% from its all-time high.
Terra Contagion
The biggest story in the cryptocurrency industry has been the implosion of Terra and its ecosystem. LUNA, which was one of the top-ten cryptocurrencies, declined sharply after its main stablecoin lost its peg.
As a result, LUNA saw its price crash below $1, which was a dramatic collapse considering that it was trading at $120 in 2021. Additionally, the total value locked (TVL) in its ecosystem declined from over $30 billion to less than $4 billion.
Therefore, the BTC/USD pair has crashed as investors worried about contagion in the blockchain industry because of the important role that stablecoins play in the sector. Also, there are signs that there will be more regulations in the sector.
The pair also declined as the US dollar index held steady after the latest American consumer inflation data. According to the Bureau of Labor Statistics (BLS) showed that the consumer price index declined slightly in April. The decline was nonetheless better than what analysts were expecting. As such, investors believe that the Fed will stick to its plan of hiking interest rates.
Meanwhile, on-chain data shows that many Bitcoin holders have started liquidating their positions during the crash. At the same time, inflows have been limited, as evidenced by the performance of Coinbase. On Tuesday, the company revealed that it made a major loss of over $400 million as the number of active users crashed. Its revenue and forward guidance missed what analysts were expecting.
BTC/USD Forecast
The BTC/USD pair has been in a spectacular crash in the past few months. The pair managed to move below the important support at 30,000 as the LUNA implosion continued. It is now trading between the third and second support lines of the standard pivot points.
The pair has also formed a bearish flag pattern and moved slightly below the 25-day and 50-day moving averages. Oscillators have all moved lower. The pair will likely keep falling as sellers target the key support level at 25,470, which is the third support. The stop for this trade will be at 30,000.
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