- Bitcoin price recovery is losing momentum, with the ADX falling to 19.20.
- US and Iranian tensions resumed as the US launched attacks against key targets.
- Technical analysis suggests that the BTC price will continue falling.
Bitcoin price recovery stalled at $77,445 as concerns about the deal between the United States and Iran rose after an exchange of fire between the two countries. BTC faces some major risks that may lead to more downside in the near future.
US-Iran Tensions Remain After Strikes
Bitcoin price remained in a narrow range today, May 26, as the recent enthusiasm about a deal between the US and Iran waned. As a result, Brent crude oil jumped to $96, while the West Texas Intermediate (WTI) rose slightly to $93.
This performance was mostly because the US military launched attacks against some Iranian targets overnight. At the same time, Israel intensified its attacks against Hezbollah in Lebanon.
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Analysts believe that Benjamin Netanyahu is attempting to undermine any potential deal between the US and Iran. He believes that the deal will benefit Iran by providing its leaders with billions of dollars in funds.
A deal that reopens the Strait of Hormuz will be bullish for Bitcoin and other cryptocurrencies because of its impact on the energy market. It would bring crude oil prices, which will lower inflation and reduce the probability that the Federal Reserve will hike interest rates. Hopes of a deal explains why US bond yields have dropped.
On the other hand, a return to war would lead to major geopolitical jitters, with Iran retaliating by bombing key targets in the Middle East. These attacks would lead to higher inflation and raise the possibility of the Fed hiking interest rates as Christopher Waller suggested last week.
Looking forward, the Bitcoin price will react to ETF inflows or outflows this week. These funds have shed over $1 billion this month, a major reversal after they added over $1.6 billion in the first six days of the month. Continued ETF outflows would be a sign of waning demand.
Bitcoin Price Prediction: Technical Analysis
There are signs that the ongoing Bitcoin price rebound is losing momentum. For one, the Average Directional Index has tumbled to 19.20, its lowest level since April 21 this year.
Bitcoin remains below the lower side of the rising wedge pattern, a common bearish reversal sign. It has moved below the 23.6% Fibonacci Retracement level. This retracement connects the lowest point this year and its highest point this month. It also dropped below the 100-day Exponential Moving Average (EMA).
Therefore, there is a likelihood that the coin will continue falling, potentially to the key support level at $70,000. A move above the resistance level at $80,000 will invalidate the bearish outlook.
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