A combination of multiple support levels, including a 21-month exponential moving average, helped ETH price rebound by nearly 30% from its local bottom.
Tag: Quantitative Easing
Terra (LUNA) at risk of 50% drop if bearish head and shoulders pattern plays out
Terra (LUNA) may fall to nearly $25 per token in the coming weeks as a head-and-shoulders (H&S) setup develops, indicating a 50% price drop, according to technical analysis shared by CRYPTOPIKK.
H&S patterns appear when the price forms three peaks in a row, with the middle peak (called the “head”) higher than the other two (left and right shoulders). All three peaks come to a top at a common price floor called the “neckline.”
Traders typically look to open a short position when the price breaks below the H&S neckline. However, some employ a “two-day” rule where they wait for the second breakout confirmation when the price retests the neckline from the downside as resistance, before entering a short position.
Meanwhile, the ideal short target for traders comes out to be at length equal to the maximum distance between the head and the neckline. In LUNA’s case, the price has now been heading toward the same H&S short target, currently near $25, as shown in the chart below.
Meanwhile, the volume recorded during the H&S breakout appears consistent, underscoring that the ongoing downtrend has enough bearish sentiment. This further raises risks of further declines in the Terra market.
LUNA’s daily momentum indicators, primarily relative strength index (RSI) and money flow index (MFI), have both entered their respective oversold regions, which some might consider to be a buy signal. CRYPTOPIKK recognized that they could prompt the LUNA price to rebound but said “the trend still seems [to be] heading down.”
Where’s the bottom?
The bearish outlook appears as the LUNA trades under the pressure of strong macroeconomic catalysts, mainly the U.S. Federal Reserve’s decision to unwind its $120 billion a month asset purchasing program entirely by March, followed by the first interest rate hike from its current near-zero levels.
Tightening monetary policies had started hurting assets that had been bullish when these policies were loose. That includes some sections of the U.S. stock market and Bitcoin (BTC). So, LUNA seems to have been tailing Bitcoin’s losses against the ongoing market uncertainty, especially as it sits atop a year-over-year profit of 3,200% versus BTC’s 11.50% gains.
Related: Defying the bear market, this automated strategy is up 15% so far in 2022
In its short history as a financial asset, LUNA’s downtrends have typically come to exhaustion as it tests its 50-week simple moving average (50-week SMA; the blue wave in the chart below) as support. That price floor was near $30 at the press time.
Meanwhile, on the daily timeframe chart, LUNA has been testing its 200-day exponential moving average (200-day EMA) for a potential rebound. Should it happen, LUNA’s next upside target appears to be near $75, as shown in the chart above.
Conversely, a decisive move below the 200-day EMA wave may trigger the H&S setup toward $25.
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.
Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?
The internet is filled with Bitcoin (BTC) price forecasts. For example, some analysts believe that the flagship crypto will hit $1 million per coin in the next 10 years, while others think BTC price will eventually drop to zero.
Without dwelling on predictions that are five or more years ahead of us, let us focus on what Bitcoin could do, say, in the next six months?
Again, the forecasts vary drastically. For instance, Antoni Trenchev, the founder of Nexo Finance, sees Bitcoin price hitting $100,000 by mid-2022.
On the other end of the spectrum is Sussex University professor Carol Alexander, who thinks Bitcoin price could drop to as low as $10,000, thereby wiping out all the gains it had made in 2021.
Bitcoin has been trending almost in the middle of these two extremely far predictions and at press time the cost to purchase one BTC is close to $36,500 at Coinbase.
Bitcoin’s circulation will increase on an average of 6.25 BTC per 10 minutes until the next halving in early 2024. This means miners will produce about 900 BTC every day. As a result, by the end of June 2022, there will be a total of 162,900 BTC created into the year.
This would push the total Bitcoin supply in circulation to about 19.078 million BTC. If BTC price is $100,000 by then, its total market capitalization would be nearly $2 trillion, up 128.50% from the year’s opening valuation near $875 billion.
Conversely, a drop to $10,000 would push the Bitcoin market capitalization of the total circulated tokens down to over $190 billion, down $685 billion, or about 78%, from this year’s open.
So the biggest question that comes to mind after looking at these mind-boggling predictions is whether it is even possible for Bitcoin to move violently towards either of the targets mentioned above. In my opinion, the answer is a BIG YES, mainly because BTC price has been notoriously volatile in the past.
One question to consider is whether or not investors are ready to inject almost a trillion dollars into the Bitcoin market across the next six months? Trenchev believes they may because of the “cheap money” factor.
Sovereign currency devaluation remains a catalyst
Investors will have noticed that the U.S. dollar’s valuation has been recovering lately.
A popular economic indicator, dubbed as the “U.S. dollar index,” measures the greenback’s strength against a weighted basket of six foreign currencies — the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP), Canadian Dollar (CAD), Swedish Krona (SEK), and Swiss Franc (CHF) — surged over 7% to 96.22 last year.
It’s also worth noticing that the dollar’s valuation has surged only against fiat currencies, but against commodities, the greenback has been losing battle after battle.
For instance, a recent U.S. Bureau of Labor Statistics report indicates that consumers paid 7% higher for everyday items in December 2021 than they did 12 months ago. In other words, the inflation in the world’s largest economy has risen to the levels never seen before 1982.
This shows the dollar is nothing but the best weak boxer in a ring competing with the six weakest boxers. Sure, the greenback has been winning rounds against them all, but it has also been running away from the real competition.
Speaking of competition, let’s compare its value against a scarcer asset, gold.
The image above also shows that almost all the fiat currencies have lost their sheen against gold. The big elephant in the room is inflation, which benefiting investors that have been hoarding the precious metal — or any hard money equivalent — against the current bearish trend in currencies like the dollar.
Currently, there is about $40 trillion circulating across markets, which includes all the physical money and the money deposited in savings and checking accounts. Meanwhile, investments, derivatives and cryptocurrencies are above $1.3 quadrillion.
So yes, there are enough greenbacks available in the market to pump the Bitcoin market by another trillion dollars, such that its cost per unit rises to $100,000 in the next six months.
Why hasn’t BTC hit $100,000 already?
Before even entertaining that argument, it is wiser to look at Bitcoin’s market cap performance over the years.
In the six-month timeframe chart above, one can see that there has not been a single instance wherein the Bitcoin market capitalization had risen by over $1 trillion. Similarly, there also has not been a single case where Bitcoin’s market valuation dropped by more than $190 billion in six months, as required in the event of a BTC price drop to $10,000.
Despite not rising or falling drastically, the Bitcoin market — as per historical data — attracts more capital in that it spits out, indicating why its price per unit has rallied by more than 14,250% to date since January 2014.
Now, returning to the “why-it-has-not-happened” argument, there seems to be only one answer: uncertainty. And uncertainty has many branches, ranging from regulatory troubles to fears that the Bitcoin market may need a correction after rallying for almost two years in a row.
The Fed’s “taper tantrum” is impacting investor confidence
The most commonly discussed reason for Bitcoin’s recent drop from $69,000 to $34,000 is the U.S. Federal Reserve’s decision to end its $120 billion a month asset purchasing program sooner than anticipated. This is expected to be followed by at least three interest rates hikes from their current near-zero levels.
These loose monetary policies ended up injecting about $6.5 trillion since the coronavirus-induced global market crash in March 2020. As a result of the excess liquidity, the dollar’s value dropped while riskier assets, including Bitcoin, became ballistically bullish.
According to Crossborder Captial founder Micheal Howell, the excess funds in the market ‘had to go somewhere.’
As the Fed unwinds its quantitative easing policy to tame inflation, it effectively removes the excess dollars from the market. And as the markets — hypothetically — run out of cash, they raise it by selling their most profitable investments, be it stock, real estate, Rolex watches or crypto.
Therefore, the next six months could turn out to be a seesaw between those who need cash and those who don’t. Inflation led by the dollar devaluation could keep many investors from selling their assets, including Bitcoin. But with the Fed switching off its liquidity plug, crypto markets could face difficulties in attracting new money.
This leaves Bitcoin with investors and firms that have excess cash in their treasuries and have been looking to deploy them into easily liquefiable assets.
So far, Bitcoin has attracted big names like Tesla, Square, MicroStrategy, and others. So naturally, it would take at least a popular Wall Street firm’s willingness to add Bitcoin to its treasury to enable BTC’s push toward $100,000.
Waiting on the retail boom
Meanwhile, as inflation creeps into people’s everyday lives, their likelihood of adopting hard assets to protect their savings could also mean a boon for the Bitcoin market. For instance, BTC’s climb to $69,000 last year coincided with an unprecedented spike in retail interest, per a Grayscale Investment report.
Related: Retail is pushing the Bitcoin price up, says Ledger CEO
The U.S. firm surveyed 1,000 investors and found that 59% were interested in investing in Bitcoin. Meanwhile, 55% said they had purchased the assets between December 2020 and December 2021.
Whether boom or bust, here’s what needs to happen
If, Bitcoin were to reach $100,000 by the end of June 2022, here’s what would need to happen.
- The M2 money supply remains at an all-time high.
- The planned interest rate hikes fail to keep inflation below the Fed’s 2% target.
- The number of non-zero Bitcoin wallets continues to rise to new record highs.
- More companies add BTC to their treasuries.
Meanwhile, Bitcoin could crash to $10,000 if:
- Long-term investors decide to dump Bitcoin to raise cash.
- Regulatory issues and a sharp correction in equities prices weighs on crypto pricing.
- Some unforeseen market manipulation or black swan event tanks BTC price like the March 2020 flash crash.
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.
Bitcoin, stocks and commodities correct after Fed chair mentions policy change
Global financial market took a hit on Nov. 30 after comments from U.S. Federal Reserve Chair Jerome Powell hinted that inflation and the Omicron Covid-19 variant are growing threats and that the bank’s easy money policies could end sooner than anticipated.
Prior to Powell’s comments, Bitcoin (BTC) had been on the rise and the digital asset had rallied 6% from a low of $55,840 in the early trading hours on Nov. 30 to an intraday high at $59,200, but the price was hammered back below $57,000 after the Fed’s remarks.
At the time of writing, Bitcoin has managed to climb back to $58,000 but a series of technical indicators signal that traders are not confident about BTC’s next move.
Stocks and commodities take a hit
It wasn’t just Bitcoin that was hard hit by the Fed’s comments. According to economist and CryptoQuant analyst Jan Wuestenfeld, the dollar index (DXY) increased while the DOW, gold and other equities indexes pulled back.
Wuestenfeld said,
“US dollar index appreciating on Powell remarks that the FED might speed up taper (no matter how believable). Everything else going down. Gold included.”
Related: Vladimir Putin says cryptocurrencies ‘bear high risks’
The Fed “behaves in a binary way”
Deeper insight into the actions from the Fed was provided by market analyst and former treasury employee Nik Bhatia, who highlighted the fact that the Fed “doesn’t have the ability to react to dynamic conditions” and instead “behaves in a binary way.”
Bhatia said,
“If things are going well, it can tighten policy. If the economy is in trouble, it eases policy.”
According to Bhatia, “inflation is running hot in the United States” with “headline statistics pointing to multi-decade high increases in aggregate price levels.”
At the same time, the Fed has implemented “a monetary policy at essentially the easiest it has ever been,” leading Bhatia to caution that “with inflation waking up, this will soon come to an end.”
Bhatia said,
“The Fed is clearly heading into a policy error in which it tightens policy despite longer-term growth and inflation expectations coming down, due to tighter monetary policy itself (that’s why it’s called policy error).”
It’s no longer “transitory inflation”
Interstingly, Powell’s comments acknowledged that the year-long mantra of “transitory inflation” is now coming to an end, with the Federal Reserve chair suggesting that it’s time to “retire” the transitory narrative.
Federal Reserve Chairman Jerome Powell just suggested that we stop using the word “transitory” when speaking about inflation.
“I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”
It was never transitory and everyone knew that.
— Pomp (@APompliano) November 30, 2021
While it’s refreshing to see a bit more honesty coming from the Fed, cryptocurrency pundit Anthony Pompliano pointed out tha the average person knew all along that the inflation was anything but “transitory” in nature and will likely remain an issue well into 2022.
The overall cryptocurrency market cap now stands at $2.638 trillion and Bitcoin’s dominance rate is 41.2%.
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.
Bitcoin price dips under $60K as Dollar Strength Index reaches 16-month highs
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.
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 grapples with a mixed outlook
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.”
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.
Why Central Banks Are The Opioid Of Our Economy
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Fedspeak: Thoughts On The Latest FOMC Press Conference
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Hawkish Fed comments and fears of stablecoin regulation spark market sell-off
The bullish optimism seen earlier in the week was dialed back on Nov. 4 after recent comments from U.S. Federal Reserve Chairman Jerome Powell confirmed that the central bank would soon start to taper its monetary policy of easing and bond buying.
These statements appear to have kicked off a series of price decreases across the crypto market and both Bitcoin (BTC) and Ether (ETH) are under pressure at the moment.
Data from Cointelegraph Markets Pro and TradingView shows that the price action for BTC flashed a warning when the price briefly dipped to $60,400 on Nov. 3 and currenlty BTC is struggling to hold the $61,000 level.
Ether has also seen its price inch lower over the course of the day after setting a new record high of $4,664 on Wednesday. At the time of writing, the top altcoin is trading at for $4,473, marking a decline of 5%.
According to independent market analyst ‘Rekt Capital’, Ether needs to close the week above its previous all-time high of $4,460 if it hopes to keep its positive momentum going.
$ETH made a new All Time High this week
All ETH needs to do to continue this positive momentum is Weekly Close above it previous ATH (blue)
This way, ETH would be able to flip its old ATH into support in an effort to springboard into Price Discovery again#Crypto #Ethereum pic.twitter.com/0ivLGveetP
— Rekt Capital (@rektcapital) November 4, 2021
Related: Chainlink’s total value secured surpasses $75B as DeFi continues to surge
High flying altcoins take a beating
The pullback in BTC and Ether has hit the altcoin market hard and pushed a majority of the tokens in the top-200 into the red.
Some of the hardest-hit tokens are the projects that have seen some of the biggest gains in recent weeks, including a 17.22% decrease in the price of SHIB and a 38% pullback in the price of OriginTrail (TRAC), which recently spiked to a new record high after being listed on Coinbase.
There are, however, a few bright spots in the market amidst today’s sea of red. The AI-powered delegated proof-of-stake protocol Velas (VLX) has seen its token gain 30.4% on the day and now trades at $0.4341, while Chromia (CHR) has gained 26.47% and Amp has saw its price increase by 20.53%.
The overall cryptocurrency market cap now stands at $2.686 trillion and Bitcoin’s dominance rate is 43%.
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.
Is Hyperinflation Inevitable? Jack Dorsey Says It’ll “Change Everything”
When Square’s boss Jack Dorsey talks about hyperinflation, the world listens. And Twitter reacts. Since so-called developed economies are now feeling the pain that inflation brings, the concept is in everyone’s mind. Every human has a front-row seat to witness the consequences of the United State’s relentless money printing. And, since the Dollar is still the reserve currency of the world, they’re all feeling it too.
Related Reading | Bullish For Bitcoin: US Inflation Expectation Breaks Out From Decade Long Downtrend
This is Jack Dorsey’s tweet:
Hyperinflation is going to change everything. It’s happening.
— jack⚡️ (@jack) October 23, 2021
As you can see, he doesn’t merely talk about inflation. He goes for “hyperinflation,” which caused adverse reactions in the replies and the quoted tweets. They accused him of fear-mongering and quoted official numbers at him. And the nay-sayers probably have a point here, because the US is far removed from the reality that word implies. However, one thing’s for sure: money printer goes brrrrrrrr… and it hasn’t stopped working since Covid hit.
Negative And Moderate Reactions To Jack Dorsey‘s Tweet
This is an example of an unnecessarily insulting response from a traditional finance person.
2/ step back and it’s disturbing that a lot of most powerful financial figures/oligarchs are invested, literally and figuratively, in various huckster schemes and libertarianish fantasies of state and civilizations collapse.
— Josh Marshall (@joshtpm) October 23, 2021
This man has obviously not done his homework regarding Bitcoin, so his argument is invalid. And doesn’t require a response. Plus, he’s being insulting to get attention, which he got. So, good for him and his dopamine levels. Let’s hope he has fun staying poor.
This is a Venezuelan economist with a moderate answer to Jack Dorsey.
I don’t think it will. But it doesn’t need to happen for things to get ugly. https://t.co/Cj85mJ8o7x
— Eduardo Gavotti (@EduardoGavotti) October 23, 2021
Since Venezuelans have first-hand experience with hyperinflation, let’s take what he says into account. The US is just feeling what inflation does. So-called developing economies live with that concept on their backs every second of every day.
BTC price chart for 10/23/2021 on Bitstamp | Source: BTC/USD on TradingView.com
Informative Reactions To Jack Dorsey’s Tweet
The Human Rights Foundation’s Alex Gladstein, a notorious Bitcoin maximalist, had this to say to Jack Dorsey.
Those shocked by this tweet live in a bubble of financial privilege.
*1.3 billion* live under double, triple, or quadruple-digit inflation: Turkey, Nigeria, Ethiopia, Iran, Lebanon, Venezuela, Cuba, Sudan, and beyond.
It’s already one of the world’s biggest humanitarian crises. https://t.co/P83opDagdu
— Alex Gladstein 🌋 ⚡ (@gladstein) October 23, 2021
He’s not lying. Hyperinflation is “already one of the world’s biggest humanitarian crises.” However, the US is far away from “Turkey, Nigeria, Ethiopia, Iran, Lebanon, Venezuela, Cuba”, and Sudan’s situation. And, since the Dollar is still the reserve currency of the world, they have a comfortable cushion to resist the constant money printing’s effects.
Serial entrepreneur and former Coinbase CTO, Balaji Srinivasan, answered Jack Dorsey with a fully-fledged idea. A “censorship-resistant inflation index.”
I wrote a spec for a censorship-resistant inflation index. It’s framed for a startup, but Square could easily do this. In a crisis, accurate inflation info would be something people checked Twitter for every day. @milessuter @moneyball @jack https://t.co/SYb2mfxjex
— Balaji Srinivasan (@balajis) October 23, 2021
In the project, he brings forth some hard truths:
“If inflation is a government-caused problem, we can’t necessarily rely on government statistics like the CPI to diagnose it or remediate it. Indeed, in places with high inflation, censorship and denial is the rule rather than the exception.”
If you are technically capable, there’s still time to send your proposal and earn “A $100k Prize for a Decentralized Inflation Dashboard.” Be aware that “if you use Chainlink’s oracle tech in your project, the best dashboard will be eligible to receive a $100k grant in LINK tokens.” Those tokens are in addition to the main prize.
Poor Understanding Of The Terminology
In a Twitter Spaces room specifically dedicated to Jack Dorsey’s tweet, notorious podcaster Preston Pysh concluded.
“I think people’s understanding of the terminology, deflation, inflation, is just grossly misunderstood. And so, when you say we’re going to have these deflationary events that are then going to lead to more QE, which is then going to result in more inflationary events. I completely agree with you, but we’re talking that there’s so much information loss in such a simple word as deflation and inflation. So the deflationary event is that this whole system is constructed as credit.”
When he says QE, Preston refers to Quantitative Easing, which Investopedia defines as:
“A form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment. Buying these securities adds new money to the economy, and also serves to lower interest rates by bidding up fixed-income securities.”
Related Reading | Jack Dorsey Plans to Build A Decentralized Exchange For Bitcoin
That being said, Preston asks:
“How many people in the US, or in the world, have that context when that’s not their expertise, right? They didn’t get a major in macroeconomics, or finance, or whatever. So, it’s just all buzzwords that people throw around. And, in the meantime, no one really even understands what those definitions even represent.”
For more information about inflation, check out the Bitcoinist Book Club analysis of Saifedean Ammous’ “The Bitcoin Standard.”
Featured Image by Gerd Altmann from Pixabay - Charts by TradingView
Bitcoin price eyes $50K as the US Dollar retreats after hitting its one-year high
Bitcoin (BTC) looks to reclaim $45,000 on Oct. 1 as the U.S dollar retreated lower after hitting its one-year high. Bitcoin’s tight inverse correlation with the greenback over the past month suggests that a weakening dollar could push BTC price even higher in the coming sessions.
Dollar drops following labor market shock
In detail, the U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of six foreign currencies, including euro and sterling, hit $94.50 Thursday for the first time since Sept. 28, 2020. But it retreated on news of rising U.S. jobless claims against the forecasts of a decline.
The labor data released Thursday showed that the number of jobless claims rose to 362,000 last week against 351,000 a week earlier and against the economists’ projection of 333,000. As a result, the number of reapplications got stuck around 2.8 million for five weeks in a row.
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For the markets, this could be the news that the Federal Reserve might delay tapering its $120 billion asset purchasing program from November to a later month, thus keeping interest rates lower and the dollar’s renewed strength temporary.
The index was trading at 94.263 at the time of this writing.
Technical outlook projects Bitcoin higher, dollar lower
Technicals also showed the greenback facing the prospect of a correction ahead. For example, independent market analyst TradingShot spotted the dollar index inside a Megaphone pattern, about to get topped out to pursue a correction in the coming sessions, as shown in the chart below.
“Based on the 1D relative strength index (RSI), it appears that DXY is right at the top of the formation as [it was] on Aug 15, 2018,” TradingShot wrote.
“DXY is building up a strong pull-back to the bottom of the Megaphone.”
Meanwhile, a recent bout of selling in the Bitcoin market lately had it paint a Falling Wedge pattern. In detail, Falling Wedges appear when the price trends lower inside a channel comprising of two diverging, descending trendlines.
Traditional analysts see the Falling Wedge pattern as a bullish reversal indicator, noting that a break above its upper trendline moves the price higher by as much as the maximum distance between the Wedge’s trendlines.
The structure’s maximum height is roughly $10,000. As a result, the Bitcoin price can at least retest $50,000 should the Wedge breakout play out as intended.
A weaker dollar means stronger Bitcoin
On the other hand, the underwhelming jobs report could boost investors’ interim appetite for Bitcoin.
Related: Bitcoin’s sharp fall from $50K linked to stronger US dollar, gold — Correlation shows
Vasja Zupan, president of Matrix Exchange, told Cointelegraph that the dollar’s weakness and devaluation against rising inflation would continue to make investors put their excess cash in crypto markets. He said:
“Bitcoin in its core proposition has an integrated hedge against inflation and therefore persistently higher inflation in the U.S. can only push it upwards. Therefore, in the long term, the dollar’s worth will continue to be lesser than Bitcoin.
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.