Bitcoin erases YTD gains as sentiment weakens
Global markets were mixed today as the rally experienced this week cooled down. In China, markets declined after data showed waning inflation. In December, CPI rose by an annualized rate of 1.9%, which was lower than the consensus estimates of 2.1%. The PPI of 0.9% also missed the forecasts of 1.6%. In the UK, the FTSE declined by 15 points after mixed reports from companies like John Lewis and Debenhams. In the European Union, the Stoxx declined by 10 points after industrial production from France missed the expectations. In the US, futures pointed to a lower decline as investors worried about the impacts of the current government shutdown.
After a few days of calmness, the price of Bitcoin declined sharply from a high of $4000 to a low of $3745. The decline spread to other cryptocurrencies which lost more than $10 billon of value. YTD, the price of Bitcoin has gained sharply as traders place their hopes on its revival. In 2018, its price declined by more than 80%.
The US dollar index rose slightly today ahead of a key speech by Fed Chair Jerome Powell, who will address participants at the Economic Club of Washington. His speech comes a day after the Fed released its minutes for the December meeting. In the minutes, the officials said that they will remain patient before making any future rate hikes. This meeting came as the stock market was falling and the Fed was under intense pressure from Donald Trump against making any more rate hikes. On economic data, the initial jobless declined by 216K in the past week. This was better than the 225K that investors were expecting. However, the continuing jobless claims rose by 1,722K, which was worse than the expected 1714K.
After remaining calm this week, the BTC/USD pair declined sharply to an intraday low of 3745. The decline was not attributed to any major news. The decline wiped the gains made this year. On the four-hour chart below, the pair’s price is below the 21-day and 42-day EMA. It is also below the important horizontal channel shown in the chart below. The price could continue to decline as negative sentiment sets in. If it does, the pair will likely test the yearly low of 3120.
The GBP/USD reached a high of 139.43 on Tuesday. Since then, the pair has continued to decline and today, it reached a low of 137.50. The pair appears to be forming an inverted cup and handle pattern. If it completes the pattern, it could continue going down to last week’s lows of below 134. The current price of 147.5 is below the short and medium-term moving averages while the RSI too are moving lower.
The EUR/USD pair was mixed today after rising sharply in yesterday’s trading. The pair declined to a low of 1.1516 from a high of 1.1570. On the four-hour chart, the pair is trading above the 21-day and 42-day EMAs. It is also below the variable index dynamic average. At the same time, the RSI has declined from the overbought level of above 70 and is currently at 63. The same is true with the CCI indicator. There is a likelihood that the pair will continue moving lower and if it does, it will find resistance at the 1.1450 level.