Bitcoin (BTC): A divergence with the dollar index?

For the past few days, the dollar index has been falling, while bitcoin is gradually rising. Could this weakness of the dollar favor the rise of the leader of cryptos in the long term? Check out this analysis.

Dollar weakens, bitcoin rises

The Dixie has gained 58% year-to-date, while the crypto leader has lost 64%. Indeed, like any asset backed by the dollar, the price of bitcoin has a negative correlation with it. The Fed has been aggressive in raising the interest rate this year. This made the dollar more “precious”, tipping the scales in favor of demand. This rise has, no doubt, contributed to the fall in the value of cryptos. Except that, since September 28, it seems that the dollar is weakening. This happens after the release of data indicating a drop in inflation.

After that, bitcoin was the best performer among the major assets against the dollar. Indeed, the crypto leader gained 16%, while Gold, the Euro and the S&P500 only gained 10%, but not that. We can also see a “divergence” between the Dixie and the price of BTC. The index made lower and lower troughs. Bitcoin, on the other hand, is on the rise, while making an upward squeezing move. Added to this is the gradual rise in the RSI, indicating the increasing bullish pressure on bitcoin.

Bitcoin (BTC): a divergence with the dollar index?
Bitcoin (BTC): a divergence with the dollar index? – BTC/USD – TradingView

Likely Scenarios

We can consider several scenarios for this cryptocurrency. Due to the divergence with the dollar index, the price of bitcoin is expected to rise for the next few days. Moreover, the RSI also indicates the increase in strength of the buyers. BTC is currently trading in the $16,500 and $17,000 area. From there, there should be bullish momentum barring any bad news in the crypto industry. Now let’s move on to the resistances that the bulls are facing.

The closest hurdle stands around $18,500. This is the 50% Fibonacci level. Thus, it is highly likely that this hurdle will send the price back towards the 168% level. However, if the price breaks through this level, the next hurdle is on the $20,000 psychological zone. This zone also lines up with the 78.6% level of the Fibonacci retracement. Nevertheless, one should not neglect the straight lines that constitute the descending channel in which the price of Bitcoin is currently moving. Indeed, these lines can play the role of support or resistance.

If the price manages to break through the $20,000 level, we can consider a rise towards $25,000. The decline of the dollar will confirm this bullish thesis on bitcoin.

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