The Bitcoin price (BTC) was supposed to maintain the critical support level between $ 11100-11300, and it did. After testing this support, BTC price continued to rally on October 20, reaching a critical resistance zone between $ 11900-12200.
This upward movement coincided with the weakening of the dollar as DXY fell significantly. The link, and is already valid in 2020.
However, other cryptocurrencies have not followed in Bitcoin’s footsteps as they sell cryptocurrencies heavily. Is attention shifting back to Bitcoin?
The week shows one very important level that has been a hurdle for Bitcoin in previous years. This is a resistance zone between $ 11700-12300. If this level is breached higher, there is likely to be a strong move towards $ 17,000.
It could also mean the start of a new cycle, with more and more arguments put forward at the start of a new bullish cycle.
However, this does not mean that penetration is inevitable as the hull is ready for more limited range movements. The main argument in favor of the bullish breakout will be the weakening of the US dollar.
The US dollar is showing weakness after the massive crash in March 2020, which sent gold, silver and bitcoin prices higher.
DXY is at a turning point for more bearish momentum
One day chart for the US dollar currency index
One day chart for the US dollar index. Source: TradingView
DXY is a great indicator of gaining momentum from other safe haven assets like gold, silver and bitcoin. Of course, when the markets are hit by a particular crisis, an escape into cash and dollars is expected.
Recently, however, the dollar has run out. One of the main arguments in favor of this DXY easing is the Fed’s Infinite Quantitative Easing which is announcing trillions in new stimulus packages.
As the dollar was showing weakness, Bitcoin continued to rally after the March crash. Likewise, the US dollar index fell in recent days to 94.64 points and continued its free fall.
The last support level is the 93 pip area. Should this be lost, new lows inevitably emerge for the US dollar index, which will only add momentum to Bitcoin.
As the chart shows, the dollar has shown weakness since the Dot.com bubble burst and began to actively recover.
During this period, the strength of gold increased and the price rose 600% amid the weakening of the US dollar. In the first part of the crisis (2000, when there was also an increase in liquidity), gold fell 30%, but its strength increased after this fall.
This correlation was also seen in Bitcoin recently, as Bitcoin has moved step by step with gold in recent months. It can be concluded that investors are looking for safe assets as a hedge against the weakening of the US dollar.
Bitcoin’s latest move is crushing altcoins. It does not matter whether BTC is rising or falling. Alternative currencies are falling like stones.
This is not exactly a strong signal for the markets as it indicates that the focus is on Bitcoin. The moment Bitcoin rises, when altcoins are sold, means that money is flowing from altcoins to Bitcoin. If that happens and Bitcoin takes a small step, little force will emerge.
As a result, the markets move cyclically and the fourth quarter of the year is usually a bad quarter for altcoin investors. History shows that the Bitcoin dominance chart rose this quarter and peaked in December.
This chart is in line with Ethereum (ETH) versus Bitcoin, as it is often at the bottom of December.
Going forward, it is very likely that Bitcoin’s market dominance will continue to grow and altcoins will continue to sell. The most important indicators for the markets in the short term are the strength of Ether and thus digital currencies against Bitcoin and the general changes in the US dollar index.