At the end of last week, Bitcoin prices rebounded from a 2-month low near the 56,500 level. However, the upward momentum has faded by now, and the price failed to reach the previous local high of 67,000. Demand is cooling in the cryptocurrency market, the bulls can no longer provide regular updates of historical highs. Short-term profit-taking, which began yesterday, may push Bitcoin prices back to the 61,000 level.
Last week, the first Asian Bitcoin ETFs started trading in Hong Kong. However, Reuters analysts indicate a rather sluggish interest of local investors in the new financial instruments. The total turnover of six ETFs on cryptocurrency amounted to only $112 million during the first day. The January launch of Bitcoin ETFs in the United States, on the other hand, resulted in a daily turnover of more than $4.5 billion.
Market participants explain the weak demand for ETFs by excessively high commissions. Management companies in Hong Kong have set fees in the range of 0.3–0.99%. This far exceeds the range of US ETFs. Alex Chiu, senior strategist at Value Partners, draws attention to the lack of competition among Hong Kong companies, which allows them to charge high fees. Until more management companies are licensed to create ETFs, the situation is unlikely to improve.
Alex Kuptsikevich, senior market analyst at FXPro, expects Bitcoin prices to remain negative in the coming weeks. According to him, cryptocurrencies historically show weaker results in May, so the initiative will belong to the bears. Kuptsikevich considers it an interesting option to open short positions on Bitcoin with the first target at the level of 55,700 and the following movement to the range of 51,000–52,000.
The price growth momentum, which occurred late last week, brought the Stochastic indicator to the overbought zone. A full-fledged sell signal will increase the likelihood of Bitcoin prices declining to the level of 61,000.
Consider the following trading strategy:
Sell BTCUSD at the current price. Take profit – 61,000. Stop loss – 65,500.
Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion
This content is for informational purposes only and is not intended to be investing advice.
