Bitcoin Correcting Amidst USD Revival

Technical Views

In terms of how far the pullback can run, this will likely depend on how the USD recovery develops. The FOMC next week will be a major focus point for traders. In light of the recent data strength we’ve seen, the Fed is expected to continue to downplay near-term rate-cut expectations. However, provided the Fed reaffirms its view that rate cuts are still forecast this year this should be enough of a catalyst for crypto to regain upside composure.

Dollar Rebound Weighing on Crypto

Following a breakout move to fresh all-time highs earlier this week, Bitcoin is now seeing fresh corrective activity. BTC futures are down around 10% from those highs with the leading crypto coin currently on track to register its only consecutive daily loss since late Feb. This is the second such pullback for Bitcoin, which was seen correcting lower by around 13% in early March before recovering and trading up to fresh highs.

BTC

The correction lower can be partly attributed to the current rebound in USD and the widespread correction we’re seeing across risk markets. With the US Dollar strengthening in response to hotter-than-forecast CPI and PPI, we’re seeing a broad risk-off move into the end of the week. Given the run up we’ve had in BTC recently, there is plenty of room for the current correction to push a little deeper near-term. However, with the upcoming halving event on the horizon, the outlook remains bullish for BTC medium-term with the market likely to resume the bull-trend once late longs have been washed out.

The pullback from highs has seen the market breaking down through the bull channel lows and the 69355 level support. While back below this level the focus is on a test of the 64540 level next, in line with bearish momentum studies readings. Should we break below there, 59755 is the deeper support to watch.