Bitcoin price analysis shows BTC has been trading in a bearish pattern for most of the day after opening the daily trading session at $27,310.14; the coin has moved downwards and is currently trading at $27,139.71.Technical analysis suggests that the cryptocurrency is at risk of falling below $25,000 in the short term. The head-and-shoulders (H&S) pattern confirms three peak formations atop a common support level. A decisive break below the H&S support level near $27,500 could see the price fall as much as the pattern’s maximum height, i.e., the distance between the head and support level, resulting in a potential 10% drop by June.
Buffett’s move adds pressure to Bitcoin; a stock market crash is possible due to its correlation with equities.
Bitcoin’s price has continued its downward trend, dipping below $28,000, with traders eyeing the United States Consumer Price Index (CPI) print for April on May 10 as a potential source of volatility. Legendary investor Warren Buffett’s recent move to increase cash holdings by $2 billion in Q1 and reduce his exposure to risk assets such as stocks has added to the downside pressure on Bitcoin.
Buffett’s Berkshire Hathaway dumped $13.30 billion worth of equities in Q1, suggesting a possible stock market crash in the near future. With Bitcoin down for the fourth consecutive day and its price highly correlated with equities, there is a possibility that BTC investors may also need to prepare for a potential stock market crash.
Furthermore, the increasing possibility of a global recession puts additional downside pressure on Bitcoin, with its 100-week correlation with the Nasdaq reaching its highest level of about 0.42%. Twitter-based Market analyst Mike McGlone believes that Bitcoin’s price could be the leading indicator for a stock market crash, and if the worst is not yet over for risk assets, Bitcoin may lead the way lower. McGlone noted that Bitcoin is up about 70% from 2023 to May 2 compared to a 20% rise in the stock index, but these may be bounces within broader bear markets.
In the short term, the April US Consumer Price Index report, scheduled for release on May 10, is expected to show inflation remaining unchanged at around 5%, with more rate hikes anticipated. However, a significant drop in inflation could prompt the Federal Reserve to consider pausing or even slashing interest rates, which may pour cold water on Buffett’s risk-off strategy. Fed funds futures data suggests that at least five rate cuts between May 2023 and January 2024 are likely.
BTC/USD price analysis on a daily and 4-hour chart: BTC bounces off key support at 27,310
Bitcoin price analysis on the daily chart indicates BTC/USD has formed descending triangle pattern, which indicates bear sentiment. The pair trades its 20-day Exponential Moving Average (EMA) and 50-day Simple Moving Average (SMA). Bitcoin is trading at $27,561.71 after a period of sideways price movement witnessed since the beginning of the day.
On the four-hour chart, BTC/USD has bounced off a crucial support level at $27,310 and is currently trading above it. This chart’s Relative Strength Index (RSI) indicator shows that Bitcoin’s price could make a bullish crossover on the 50 levels. The MACD indicator shows that the pair is in a bearish zone while the histogram has flattened and is below the line, suggesting sideways price action.
Bitcoin price analysis conclusion
Bitcoin’s price has been trending downwards, with technical analysis suggesting a potential short-term drop below $25,000 due to the H&S pattern’s confirmation. Warren Buffett’s recent move to increase cash holdings and reduce exposure to risk assets such as stocks has added to the downside pressure on Bitcoin.
Its highly correlated nature with equities suggests BTC investors may need to prepare for a potential stock market crash. The upcoming US Consumer Price Index report for April and the possibility of a global recession may also contribute to further downside pressure on Bitcoin’s price. However, the recent price action on the 4-hour chart signals a potential bullish reversal above $27,310 and may be a good signal to start accumulating Bitcoin. The key resistance for BTC/USD is at $29,000, and the key support level remains at $27,310.
While waiting for Bitcoin to move further, see our Price Predictions on XDC, Polkadot, and Curve
