Closely followed crypto analyst Justin Bennett says that bargain-hunters hoping to get Bitcoin at $30,000 will likely end up disappointed.
Bennett tells his 97,000 Twitter followers that many people who watch his YouTube strategy sessions are saying that a $30,000 Bitcoin is imminent, but he doubts traders will get BTC that cheap.
“Every other comment on my YouTube channel is someone waiting/wishing for $30k $BTC.
It would be the first time in a long time that retail gets exactly what they want.
I think a move higher from $35k-$36k is more likely.”
The analyst says that the dollar index (DXY), which compares the USD to a basket of other fiat currencies, is playing a big role in the crypto markets. Usually, a strengthening DXY can signal weakness in many assets, while a struggling DXY often suggests higher prices.
According to Bennett, crypto traders may want to keep an eye on a trend reversal playing out in the DXY to signal a new bull run in the digital asset markets.
“DXY is still coming off. 95.50 is probably next.
A close below 94.60 is required to reverse the trend.”
Source: Justin Bennett/Twitter
The analyst recently said that contrary to what some say, he doesn’t think the crypto bull market is over. While some short-term volatility may be in play, Bennett says crypto is still due for another “melt-up” rally sometime this year.
“I don’t think the crypto bull market has ended.
Markets don’t crash when everyone expects them to, and right now, everyone expects it.
My base case is for one more melt-up this year, followed by a correction in either late 2022 or 2023…
So that means we could be in for more volatility in the short term if the stock market is going to strong-arm the Fed into remaining accommodative for longer.
But ultimately, I don’t think this crypto bull market is over just yet. It’ll be an interesting few months regardless.”
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Bitcoin (BTC) logged its worst daily performance since September as BTC price slid by 10% to under $59,000 on Tuesday. On the other hand, the U.S. dollar jumped to its best level in sixteen months after spending across the American retail sector grew despite persistent Covid-19 fears and inflation concerns.
The BTC price established an intraday low of around $58,600 on Coinbase, only to retreat higher to reclaim $60,000 as its psychological support. Its move downside appeared as U.S. President Joe Biden signed the $550 billion infrastructure bill into law, including new tax-reporting requirements for cryptocurrency users.
Some used the news yesterday (Infrastructure Bill) to shake the tree and get some more cheap bags of #bitcoin for themselves.
— David Gokhshtein (@davidgokhshtein) November 16, 2021
Stronger retail data
Meanwhile, the dollar continued its prevailing bull run smoothly as sales at the U.S. retail stores rose by 1.7% in October versus 0.4% in the previous month. That provided another evidence — after an excellent Nonfarm Payrolls report last week — that the U.S. economy has been rebounding strongly from the Covid-19 lows.
As a result, investors raised their bids on the dollar, anticipating that the Federal Reserve would accelerate the tapering of its $120 billion a month asset purchase program, leading to earlier-than-expected rate hikes, which remained near zero since March 2020.
The U.S. dollar index (DXY), which measures the greenback’s performance against a basket of top foreign currencies, touched an intraday high of 95.821 on Nov. 16, its highest level since July 2020. Conversely, Bitcoin, which rallied strongly against a lower interest rate environment throughout 2020 and 2021, retreated.
DXY weekly price chart. Source: TradingView
More gains ahead for the dollar
Analysts anticipated the dollar to continue its growth higher in the coming months ahead, with market analyst Scott Melker predicting DXY to reach 97.50.
At the core of Melker’s bullish outlook was a “double bottom” setup.
In detail, Double Bottoms appear when the price forms two low points on a similar horizontal level to represent a potential bullish reversal. A bullish confirmation comes when the price breaks above a specific resistance level — a high point between the two bottoms — to target level at a length equal to the pattern’s maximum height.
So it appears, the U.S. dollar index has been breaking out of a similar Double Bottom setup, as shown in the chart below.
Bitcoin has more than doubled its prices in 2021 amid growing concerns about inflation. Nigel Green, chief executive of DeVere Group, noted that the cryptocurrency may keep on surging in value at least until the second quarter of 2022, citing the U.S. consumer price index’s (CPI) recent climb to its three-decade high.
“This latest data out of the U.S. will only compound global fears about inflation as price pressures run hot around the world,” he noted, adding:
“In this inflationary period, Bitcoin has outperformed gold, which has been almost universally hailed as the ultimate inflation hedge – until now.”
BTC/USD daily price chart. Source: TradingView
Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore, called Bitcoin’s ongoing correction a “healthy pullback,” especially after its 175%-plus year-to-date price rally to $69,000.
“It would be unusual to keep moving up without corrections,” he noted.
On the other hand, Joel Kruger, a currency strategist at LMAX Group, said that a tighter Fed policy would start weighing on the broader market, hitting the riskiest assets the hardest, a reason why Bitcoin and the rest of the crypto market has been retreating against a rising dollar.
Related: Bitcoin will peak at $253K, Ethereum at $22K this cycle if 2016 halving bull run repeats
Martha Reyes, head of research at Bequant, a digital-asset firm, also called Bitcoin “a risk-on investment,” stating that people would want to raise cash from the most profitable assets in times of stress.
Bitcoin was trading at $60,625 at the time of writing.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Popular crypto analyst Benjamin Cowen says that one overlooked catalyst could ignite a big long-term rally for Bitcoin (BTC).
In a new strategy session, the analyst takes a look at the dollar index (DXY), which compares the US dollar against a basket of other major fiat currencies. Generally speaking, a weaker dollar can often imply higher prices in many assets.
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The analyst says one thing that could put extra bullish energy behind Bitcoin is the DXY beginning a macro trend downward. According to Cowen, the DXY is potentially on the edge of a bearish trend as it gets rejected from its 100-week simple moving average (SMA).
“Ideally speaking, in order to really be the best conditions for Bitcoin, we’d like to see this keep coming on down. This would be the best condition for Bitcoin and here’s the crazy thing when you talk about the US dollar currency index… Look at the actual macro range.”
Cowen says DXY has been trading in a large descending channel for roughly 30 years. The crypto analyst points out that there is currently much more room at the bottom of the channel than the top, which could suggest more downside for the dollar and therefore higher prices for Bitcoin.
He says that despite a rising DXY during the majority of Bitcoin’s lifetime, BTC has still managed to maintain a long-term bullish structure. The analyst considers what could happen if the DXY eventually entered a more considerable downtrend.
“The dollar has more or less moved up during that time. It’s moved up, but there were a couple of key times when the dollar was moving down and that corresponded to Bitcoin bull markets.
Imagine what Bitcoin could do if the dollar ended up coming back down… I think that would be incredibly bullish for Bitcoin.”
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The price of Bitcoin (BTC) is struggling to break past $51,000 on March 8 as the U.S. Treasury yield is rising again while the U.S. Dollar Index (DXY) is at the highest levels in over three months.
The global stock market, including equities in the U.S. and Asia, have pulled back in tandem as the Senate’s stimulus approval sparked inflation fears.
BTC (orange) vs. DXY (green) vs. Treasury yield (blue). Source: Tradingview
Why is Bitcoin dropping off of inflation fears
As Welt market analyst, Holger Zschaepitz, explained, the bond market turned into turmoil as the 10-year U.S. Treasury yield surged to 1.6% after the stimulus news broke.
The instability in the bond market naturally led to a sell-off of risk-on assets, affecting both stocks and cryptocurrencies. The analyst wrote:
“Bond turmoil continues w/US 10y yields jump to almost 1.6% as the $1.9tn US fiscal package alongside robust Chinese trade data fuel inflation fears.”
The U.S. 10-year Treasury yield. Source: Bloomberg
Stocks and Bitcoin have seen a tightening correlation in recent weeks likely due to the increasingl unfavorable macro landscape.
Peter Brandt, a long-time futures and FX trader, said he saw many correlations throughout his career. However, he said that correlations can also come to an end “dramatically.”
Hence, in the foreseeable future, Bitcoin could move in tandem with stocks as the markets react negatively to the rising Treasury yield. But on longer time frames, the bull run of Bitcoin could strengthen and gain momentum if the correlation begins to weaken. He said:
“Through my 46 yrs. trading I have seen MANY sacred correlations come and go Gold v. Yen or USD or stocks Silver vs. Gold Interest rates v. stocks or Gold BTC v. whatever Et al When these correlations come to an end, they often end dramatically Study each market with its own chart.”
Nevertheless, March may turn out to be a slow month for BTC trading with low volatility.
Is a bigger drop coming?
If the traditional market drops, traders seemingly anticipate a broader Bitcoin pullback in the near term.
The price of Bitcoin with key levels. Source: Loma, TradingView.com
For example, pseudonymous cryptocurrency trader Loma said a short-term drop to $48,000, an important support level, cannot be ruled out if the legacy markets continue to show weakness. He wrote:
“Base still forming, I’m liking how everything is playing out. Only concerns are temporary legacy market correlations so if we dump tomorrow, I’d anticipate a re-visit the lows or at least the EQ at ~$48k. Still taking it easy on trading, focusing more on $BTC and $ETH.”
This week, the key for Bitcoin is whether the DXY sees a pullback after a week-long rally, providing the risk-on market some room for a relief rally.
BTC_USDT volume support/resistance levels (Binance). Source: Material Indicators
As Cointelegraph previously reported, the Treasury yield is also approaching a key resistance area, and if it gets rejected, Bitcoin could regain momentum in the near term to rally above the next big resistance areas at $52,000 and $53,000.
Bitcoin (BTC) starts a new week on a firmly bullish note as stocks tumble and BTC managed to close the week above $50,000.
After a mixed performance last week that saw multiple tests of $46,000, buyer support is entering and BTC/USD is within 15% of all-time highs.
Cointelegraph takes a look at what might lie in store for traders in the coming days with five factors likely to affect Bitcoin price action.
Stocks nosedive as USD gains
The tide is turning on the equities miracle of the past year, with indices falling left and right amid warnings that the rout is far from over.
On the back of significant losses in tech stocks, including crypto industry favorites Tesla and MicroStrategy, Asian stocks shed over 1% on the open on Monday.
Despite a strong close last week, expectations were for a knock-on effect for the U.S. prior to Wall Street returning. According to analysts at Morgan Stanley, the Nasdaq 100 could even touch its 200-day moving average, lying around 800 points below its current level of 12,642.
“You will see a lot of volatility in markets,” Kim Stafford, Asia Pacific head at Pacific Investment Management, told Bloomberg.
“We believe that confidence is improving, especially with vaccines coming online, so we will see an uptick in growth globally. There are a lot of reasons to be confident in the market but a lot of this is also priced in.”
With grim short-term perspectives for equities traders, the U.S. dollar is boosting its existing strong performance.
Extending a run from late February, the U.S. dollar currency index (DXY) touched 92.19 over the weekend and held above the 92 mark on Monday.
Traditionally a problematic phenomenon for Bitcoin price strength, recent moves on the index have been felt less than over the past year with BTC/USD broadly shrugging off sentiment to forge an increasingly asymmetric path.
U.S. dollar currency index 1-day candle chart. Source: Tradingview
Coming in tandem with the USD meanwhile was renewed strength in oil prices, which surged on news that Saudi Arabia’s infrastructure had suffered an attack. Output, however, has not reportedly been affected.
Stimulus checks incoming
The main impetus for dollar strength, however counterintuitive, has been news that lawmakers will inflate its supply to the tune of $1.9 trillion as they pass the latest coronavirus stimulus package.
Passed by the Senate on Sunday, President Joe Biden’s sweeping cash injection piles fresh debt on the country’s existing mountain but will supply eligible Americans with $1,400 payouts.
Given Bitcoin’s increased public profile this year compared to the last major stimulus payout of $1,200 in March 2020, expectations are high that at least some of the money will flow into BTC.
The figures, now widely repeated online, speak for themselves. According to online monitoring resource Bitcoin Stimulus, the combined value of the two previous checks — $1,200 and $600 — would be over $10,250 as of March 4 had each recipient immediately purchased Bitcoin.
Put another way, the first $1,200 stimulus bought 0.18 BTC at the time of receipt, while the $600 check bought 0.02 BTC. This time around, despite the USD amount being larger, at the time of writing, it would only be worth 0.028 BTC.
Long term, meanwhile, dollar weakness weighs heavy on the minds of investors given both its supply increase and the other impacts associated with the highly controversial economic response to the virus.
Despite claiming not to be a “Bitcoin maximalist,” veteran trader Peter Brandt said that Bitcoin would only profit from the current policy on longer timeframes.
“The devaluation of the purchasing power of the U.S. Dollar… has only just begun,” he warned on Sunday.
“This is why Bitcoin BTC, real estate, U.S. equities and commodities will continue to trend higher when expressed in USD fiat terms.”
Brandt also revealed that his second-largest investment position after real estate is his BTC allocation.
Bitcoin sees 2nd highest weekly close
Within Bitcoin, bulls were buoyed as the weekend came and went as fresh upside took BTC/USD over $50,000.
Coming in step with the stimulus announcement, local highs totalled $51,177 on Bitstamp. At the same time, positive investment news from China extended the supply shortage narrative, this focusing on institutional buy-ins reducing the already dwindling amount of BTC available for purchase on the market.
Despite failing to hold on Monday, the psychologically significant level did manage to remain for the weekly close, providing Bitcoin’s second-largest weekly close on record.
Analyzing trader behavior, Rafael Schultze-Kraft, co-founder and CTO of on-chain analytics resource Glassnode, forecast that a return below $46,600 is unlikely.
“This support is holding nicely. And it got stronger! We now have a wall of 1.2M $BTC that moved on-chain between $46.6k and $48.6k,” he wrote on Sunday.
“That’s 6.5% (!) of the circulating supply. I’d be surprised if we go below anytime soon. I was long at <$50k, and am long now anyways.”
For Cointelegraph Markets analyst Michaël van de Poppe, a conspicuous trend despite the higher price levels was an overall lack of interest among consumers in particular.
“I’ve noticed the decrease of social media engagement and media attention on Bitcoin recently. While a few weeks ago, everyone and their parents wanted to get Bitcoin out of FOMO,” he tweeted on Monday.
“However, the current period is the time to accumulate your positions. When there’s no hype.”
Popular Twitter account Bitcoin Archive agreed, responding that interest “goes up and down” along with price performance.
Additional on-chain indicators confirmed “business as usual” among market participants.
At $50,000, miners are uninterested in selling, while flows to exchanges and exchange reserves continue to decrease, data shows.
For statistician Willy Woo, selling pressure has instead come from institutional players needing to prepare for reporting as Q1 comes to an end — far from a bearish signal.
“Who has been selling? Apart from margin longs liquidating, my guess from the data, it’s hedge funds rebalancing for end of Q1 reporting,” he told Twitter followers late last week.
“Many have mandates to rebalance when an allocation gets too big; BTC has outperformed incredibly. (Sell your winners, buy more losers).”
Woo also noted that large whales have been selling while smaller whales, who hold between 10 and 100 BTC, have increased their presence.
“Looking at the age of coins in this sell off, Dormancy being low tells us, so it’s young coins. It’s new whales who bought in recently selling their positions,” he added alongside charts from Glassnode and his own analytics resource, Woobull.
By contrast, he said, buy support is coming from “strong hodlers.”
Bitcoin average coin dormancy chart. Source: Willy Woo/ Twitter
Extreme greed is back
After a brisk drop to “fear” territory, the Crypto Fear & Greed Index is back to signalling “extreme greed” among investors.
Providing an indication that further price rises may be short-lived, the Index hit 81/100 on Monday, up from 76 the day before. Just a week ago, it measured 38/100.
Crypto Fear & Greed Index. Source: Alternative.me
Nevertheless, on-chain analysis has a convincing counterargument, with Glassnode’s Network Value to Transactions (NVT) data showing that volume has broadly accompanied recent price rises.
“What defines a healthy rise in Bitcoin’s price? …one that is backed by on-chain volume!” co-founders Yann Allemann and Jan Happel tweeted referencing Woo.
“When the price increases too fast without allowing blockchain activity to catch up, it is often not sustainable.”
Bitcoin (BTC) fell below $35,000 on Jan. 15 as renewed strength in the U.S. dollar piled pressure on the largest cryptocurrency. BTC bounced off support at $34,300 and is trading at $35,300 at the time of writing.
Data from Cointelegraph Markets and TradingView shows BTC/USD hitting its lowest in over 24 hours at publication time on Friday, with $34,000 so far acting as support.
The previous day saw the pair reclaim $40,000 for a brief instant before falling back to range in a corridor that had formed at the start of the week. The latest drop reinforced the assumption that Bitcoin would continue in this corridor, which has $30,000 as support and $40,000 as a rough ceiling.
“#Bitcoin consolidating is very healthy for the market after the massive impulse move to $41,500,” Cointelegraph Markets analyst Michaël van de Poppe explained in a series of tweets.
“#Bitcoin is approaching a bounce area here as we rejected the crucial resistance around $40,000. Benefits the fact of further consolidation before continuation of the upwards momentum. Completely healthy.”
Halving analysis suggests “7x upside potential”
The fresh downturn for Bitcoin coincided with an uptick in the U.S. dollar currency index (DXY) coming on the back of President-elect Joe Biden’s $1.9 trillion coronavirus stimulus plan. Despite the gravity of this U.S. dollar supply expansion, markets appeared to react favorably to the plans, leading the DXY upwards at the expense of Bitcoin, to which it typically exhibits inverse correlation.
“Context: The dollar is breaking out on multiple time frames. Quite a strong recovery at a multi-month support area. Some argue this is bad for Bitcoin, gold and risk-on assets, hence the narrative,” Cointelegraph in-house analyst Joseph Young summarized.
BTC/USD (Bitstamp) vs. DXY (orange). Source: TradingView
Young noted that on derivatives markets, investors “buying the dip” was causing an extra headache, potentially dampening the prospects of a relief rally.
Zoom out, however, and Bitcoin was if anything underperforming compared with previous bull cycles. According to on-chain analytics resource Ecoinometrics, this left the door open for further conspicuous gains.
Bitcoin price post-halving comparison as of Jan. 15. Source: Ecoinometrics/Twitter
“This bull market doesn’t stop at $40k,” part of a tweet with a comparative chart read.
“From the growth of the previous cycles we still have a 7x upside potential.”
