12.05.202210:04 Forex Analysis & Reviews: Technical Analysis of BTC/USD for May 12, 2022

Crypto Industry News:

The US Federal Reserve Board has published a six-month financial stability report. The report points to the volatility in commodity markets caused by the Russian invasion of Ukraine, the spread of the COVID-19 omicron variant, and "higher and more sustained than expected" inflation as sources of volatility.

The report singled out stablecoins and certain types of money market funds and noted that they were prone to banking panic. According to the Fed, stablecoins are worth a total of $ 180 billion, 80% of which are Tether, USD Coin, and Binance USD. The central bank said they were backed by assets that could depreciate or liquidate under pressure, leading to a buyback risk, which could be compounded by a lack of transparency.

Besides, the increasing use of stablecoins in the leveraged trading of other cryptocurrencies "may increase the volatility of the demand for stablecoins and increase the risk of buyout."

The report reflects the information as of April 25. Since the Federal Open Market Committee voted on a 50bp rate hike on May 4, there has been some signaled volatility. Terra USD outperformed Binance USD to become the third-largest stablecoin on April 18, then temporarily detached from the dollar and dropped to $ 0.67.

The Fed report included a framework discussion on CBDC that was largely familiar. It reiterated the findings in the Fed's January discussion paper that a digital US dollar would best meet a country's needs if it were protected, identity verification, and intermediation. The Fed then resumed its neutral stance on the creation of the US CBDC.

Technical Market Outlook:

The BTC/USD pair has made another swing low at the level of $25,357 (at the time of writing this article) as the panic sell-off continues. The bulls keep trying to bounce higher, but were rejected from the nearest technical resistance seen at $28,930. The weak and negative momentum supports the short-term bearish outlook with a new target for bears seen at the level of $20,000. The market keeps making lower lows and lower highs on the H4 time frame chart, so the down trend is intact.

Weekly Pivot Points:

WR3 - $43,590

WR2 - $41,841

WR1 - $37,271

Weekly Pivot - $35,409

WS1 - $31,101

WS2 - $29,209

WS3 - $24,500

Trading Outlook:

The down trend on the H4, Daily and Weekly time frames continues. So far every bounce and attempt to rally is being used to sell Bitcoin for a better price by the market participants, so the bearish pressure is still high. The key long term technical support is seen at the round psychological level of $20,000.