Recommendations for Trading in the Cryptocurrency Market on January 30

[Ben Graham]

Bitcoin has crashed down to around $81,000, while Ethereum has hit a new low of $2,682 and shows no signs of recovery. Most likely, the bearish market will continue, so be extremely cautious with purchases under the current conditions.

The market decline was directly linked to a sharp risk-off sentiment due to a weak start to the earnings season in the US, which adversely affected the stock market. However, another important factor could influence market sentiment.

Currently, Kevin Warsh is considered the leading candidate for the Fed Chair position, which is a bearish factor for the cryptocurrency market and Bitcoin. His potential candidacy has already raised concerns among crypto investors, and there are valid reasons for this.

Firstly, Warsh is perceived as a hawk—his rhetoric typically emphasizes inflation risks and the need for strict monetary discipline. This means that if appointed, the likelihood of a rapid easing of monetary policy, i.e., a rate cut, significantly decreases. Secondly, hawkish rhetoric generally leads to higher real interest rates and yields on government bonds. This, in turn, dampens appetite for risk assets like Bitcoin, as investors shift towards more conservative instruments with guaranteed returns. Higher interest rates make alternative investments, including cryptocurrencies, less attractive. Thirdly, Warsh is associated with a tighter liquidity policy. This implies a reduction in the Federal Reserve's balance sheet and, consequently, a decrease in the amount of cheap money in the economy. Such tightening of financial conditions typically negatively affects asset prices, including those of cryptocurrencies.

Finally, the very prospect of his appointment has already triggered risk-off sentiment in the market. Traders, fearing a more restrictive monetary policy, are starting to shed riskier assets, which creates additional pressure on Bitcoin. Thus, in the long term, Warsh's appointment could seriously affect the cryptocurrency market.

Today, Trump will announce his candidate to replace Powell, so new market volatility is inevitable.

As for intraday strategies in the cryptocurrency market, I will continue to act based on any significant pullbacks in Bitcoin and Ethereum, anticipating the continuation of the long-term bullish market, which has not disappeared.

For short-term trading, the strategies and conditions are described below.

Bitcoin

Buying Scenario

Scenario #1: I will buy Bitcoin today upon reaching an entry point around $82,900, targeting growth to $83,900. At around $83,900, I will exit my long positions and sell immediately on the retracement. Before buying on a breakout, ensure that the 50-day moving average is below the current price, and the Awesome indicator is above zero.

Scenario #2: I can buy Bitcoin from the lower boundary of $82,100 if there is no market reaction to its breakout in the opposite direction toward the levels of $82,900 and $83,900.

Selling Scenario

Scenario #1: I plan to sell Bitcoin today upon reaching an entry point around $82,100, targeting a decline to $80,700. At around $80,700, I will exit my short positions and buy immediately on the retracement. Before selling on a breakout, ensure that the 50-day moving average is above the current price, and the Awesome indicator is below zero.

Scenario #2: I can sell Bitcoin from the upper boundary of $82,900 if there is no market reaction to its breakout in the opposite direction toward the levels of $82,100 and $80,700.

Ethereum

Buying Scenario

Scenario #1: I will buy Ethereum today upon reaching an entry point around $2,961, targeting a move to $2,990. At around $2,990, I will exit my long positions and sell immediately on the retracement. Before buying on a breakout, ensure that the 50-day moving average is below the current price, and the Awesome indicator is above zero.

Scenario #2: I can buy Ethereum from the lower boundary of $2,938 if there is no market reaction to its breakout in the opposite direction toward the levels of $2,961 and $2,990.

Selling Scenario

Scenario #1: I plan to sell Ethereum today upon reaching an entry point around $2,938, targeting a decline to $2,910. At around $2,910, I will exit my short positions and buy immediately on the retracement. Before selling on a breakout, ensure that the 50-day moving average is above the current price, and the Awesome indicator is below zero.

Scenario #2: I can sell Ethereum from the upper boundary of $2,961 if there is no market reaction to its breakout in the opposite direction toward the levels of $2,938 and $2,910.

The material has been provided by InstaForex Company - www.instaforex.com