The US dollar index (DXY) shows signs of a short-term peak as the bitcoin price (BTC) shows signs of bullish in the short term.
It is an account that the price of bitcoins often coincides with the weakening of the dollar.
Since storage media such as gold and bitcoin are valued against the dollar, a declining DXY in theory is likely to have a positive effect on the price of BTC.
Bitcoin gives you $ 50,000 back
As the dollar began to consolidate, Bitcoin crossed $ 50,000 on March 3, testing its $ 51,600 resistance level.
Above $ 51,600 there will be little resistance up to $ 56,000. Therefore, overcoming this level is crucial for sustainable growth in the short term.
Bitcoin Jack, a quasi-pseudo-trader who predicted to hit $ 3600 in March 2020, said:
“Given that it is very likely that a $ 1.9 trillion stimulus package will be approved over the next two weeks, I guess the dollar has peaked here. Maybe, but the structure is also very similar to the previous merger.”
US Dollar Index. Source: Tradingview.com, Bitcoin Jack
If Bitcoin continues to rally in the midst of the weak dollar, it could allow BTC to take advantage of two macros simultaneously.
First, Bitcoin naturally benefits a lower dollar. Second, a $ 1.9 trillion US stimulus could act as a catalyst for broader BTC growth while weakening the dollar.
Bitcoin probably weakened last week due to the shocking general climate as the dollar began to rise and bond yields rose to an annual high.
If macroeconomic conditions were the main catalyst for Bitcoin’s decline, and now that bond yields are down, they could support BTC’s momentum in the coming weeks.
Was $ 42.9K a local bottom?
According to John Chu, director of Global Expansion at Ground X, $ 42,900 is likely to be a local bottom for bitcoin in the foreseeable future.
Chu had previously predicted a short-term decline in Bitcoin, and he expected it to fall to around $ 40,000- $ 41,000. BTC did not fall to the low, but it fell below $ 43,000, almost filling a 30% drop from the local high. Chu sa:
“At this point, it looks like 42.9K was at the bottom (local). Anyway, I’m glad the bulls are under control again.”
Bitcoin pricing structure. Source: John Chow.
While $ 44,000 was the main support level, Bitcoin’s rapid recovery to $ 51,000 indicated that the decline was in itself a rejection.
In technical analysis, the term “divergence” means that the asset briefly falls or rises above a key level, and then returns to the average.
Following Bitcoin’s strong recovery, it is crucial that the dominant cryptocurrency retests its $ 56,000 resistance range. On top of that, a new full-time high has opened, making $ 60,000 the next potential target.