BTC price could decline and trade sideways near $38,000 if bulls fail to keep the support zone
Last week Bitcoin price traded higher following a dismal performance a week before. After opening the week at $33k, buyers pushed to highs of $41,000 before upward momentum collapsed.
Bitcoin price then commenced on a downside correction that threatened to push it even lower from the trendline near $40,000. But after rallying to close at $38,870, the BTC/USD pair currently sits on a major support level.
Bitcoin price outlook
BTC opens the week that the CME launches ETH futures in a positive zone, with bulls holding the main support zone at $38,800.
What happens next might depend on whether bulls manage to break above an immediate resistance line to continue higher. The weekly log has the price barrier (blue dotted line) at $40,147. Break this line and buyers could retest the all-time high and probably eye prices above $43.5k in the week.
On the contrary, moving in the opposite direction could see the price drop towards $38,000. Here the action is likely to descend into consolidation, with indecisiveness locking the pair within an ascending triangle on the weekly timeframe.
BTC/USD weekly price chart. Source: TradingView
On the hourly chart, buyers have tested resistance at $39,500 and are currently looking to defend the support zone at the 50-day simple moving average near $39,200. The zone is above a descending downtrend line formed since 6 February when BTC/USD peaked at $41,025.
Bulls need to keep prices above this line to prevent a swift dip that could invite more sell-off pressure. In the event sellers take command, the first line of defence for bulls is at the 100-hourly moving average. The 100-SMA provides support at $38,490. Keeping this zone and rebounding off the uptrend line would see it resume the upside towards $40k.
However, the positive view could be invalidated if there’s a strong downside below $38,000.
BTC/USD hourly price chart. Source: TradingView
Investors might have to watch the wider market for trends, led by the outlook for Gold and the US 10-year yields. The spike in the yield rate has seen it come close to an 11-month high.
As a result, there’s an increased risk appetite among investors which has seen the traditional stock market rally. While a similar sentiment for crypto could be positive, rallying stocks could likely draw interest away from Gold and other safe-haven assets, including Bitcoin.
An uptick in sentiment for the US dollar, on positive economic views from the Fed, could also see Bitcoin price face increased downside pressure. Investors also need to note that crypto markets typically slow down during the Chinese New Year holiday, which begins this Thursday.