Yerevan (CoinChapter.com) — A moving average threatens the ongoing bullish bias in the Bitcoin market. And it is not even on the cryptocurrency’s chart.
The US dollar index, a benchmark to measure the greenback’s strength against a basket of top foreign currencies, breached its 200-day moving average on Thursday. It formed a higher high at 92.75 while the 200-DMA was lurking around 92.58, confirming a renewed appetite for the dollar in global markets as the US continues to impress with a faster-than-expected economic recovery.
Bitcoin Versus Dollar: Head-On
Bitcoin did not like a rising dollar strength. The cryptocurrency plunged towards $50,000 during the US session Thursday after dropping two days in a row. Measured from its record high, the BTC/USD exchange rate was trading up to 18.59 percent lower. The dollar index, on the other hand, was up more than 3.5 percent from its 2021 low.
FxStreet analyst Pablo Piovano noted that the dollar’s recent strength borrowed cues from Joe Biden’s $1.9 trillion coronavirus stimulus package. More bullish tailwinds for the greenback came from weakening in foreign currencies. The Euro declined due to fears of fresh lockdowns in the eurozone.
Meanwhile, the Turkish Lira crashed after President Recep Tayyip Erdogan fired his hawkish central bank governor responsible for improving the currency’s performance from the pits of 2020. A recent uptick in US bond yields also made the prospect of holding US dollars attractive among foreign investors.
Bitcoin also kept facing downside pressure as economists raised their forecasts for the US gross-domestic-product growth in 2021. The OECD noted that Americans could add 3 to 4 percentages to their GDP in 2021. Economists on Wall Street also raised their expectations, stating the US GDP would be 8 percent by the end of this year.
That should mean higher sales and profits from American companies and businesses, inviting investments from foreigners, and thus adding further to the demand for the US dollar.
Against all these fundamentals, the US dollar index crossed above its 200-DMA while the Bitcoin broke below its 50-DMA.
A further slipover below the 50-DMA risks sending the BTC/USD rate towards its next intermediate support target of $43,743. The level earlier offered a price floor to the pair before it climbed to its all-time high above $61,000. Meanwhile, it is also near the “maximum pain” level dictated by the bitcoin options market, with its $6 billion contracts expiring this Friday.
“The real recovery is likely to start after the options expire this Friday, which might mean that strong growth could be expected over the weekend, or early next week,” Greg Waisman, the co-founder and COO of the global payment network Mercuryo, told CoinChapter in an email response. “While there are no guarantees that this will happen, it might be worth keeping an eye out for price changes.”