BTC Reversing on Monday

Bitcoin prices have come under pressure this week, amidst a general weakening in risk appetite as focus reverts back to hawkish Fed expectations and ongoing Iran war uncertainty. Last week, US inflation was seen jumping higher to 38% from 3.3% prior, above the 3.7% the market was looking for. Market pricing for a Fed rate hike by year end has now risen just above the 50% mark from below 30% before the release. With risk assets recoiling accordingly, BTC has seen heavy selling today, extending losses from Friday when the futures market first came under pressure.

Disappointment Over Iran Progress

Crypto prices had been rallying firmly over the last month boosted by creeping optimism that a peace deal between the US and Iran was on the cards. However, with negotiations stalled and the Strait of Hormuz still closed, higher energy prices are turning focus back to inflationary pressures and rising expectations that central banks around the world will be forced to tighten rates accordingly. In this context, BCT is vulnerable to an exodus of ETF capital (which had been a key driver of the recent push higher) as traders move back into safe-haven positions. Consequently, only news of a breakthrough in peace talks is likely to help drive a fresh move higher in BCT here with risks now pointed lower again while uncertainty persists.

Technical Views

BTC

The rally in BTC has stalled for now with price reversing back under the $80,195. Focus is now on a test of the $74,270 level with the bull channel lows coming in just below there. Bulls need to defend the channel support to prevent a deeper dop lower and a shift in focus back to YTD lows.