Crypto News

One Moving Average Stands Between Bitcoin and a Price Crash

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT
One Moving Average Stands Between Bitcoin and a Price Crash

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.

US Dollar Index, DXY, US Dollar value
US dollar index attempts a breakout above its 200-DMA. Source: DXY on TradingView.com

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.

Some Hopes

Against all these fundamentals, the US dollar index crossed above its 200-DMA while the Bitcoin broke below its 50-DMA.

Bitcoin, cryptocurrency, BTCUSD, BTCUSDT
Bitcoin flirts with 50-DMA support. Source: BTCUSD on TradingView.com

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.”

How useful was this post?

Click on a star to rate it!

Yashu Gola

Yashu Gola is a Mumbai-based finance journalist. He is profoundly active in the bitcoin space since 2014 – and has contributed to several cryptocurrency media outlets, including CoinChapter, NewsBTC, FxDailyReport, Bitcoinist, and CCN. Academically, Yashu holds a bachelor's in information technology, with majors in data structures and C++ programming language. He has also won the 'Atulya Award' for his efforts towards raising $100,000 for an India-based farming project.

Related "Bitcoin" News

Holo (HOT) Follow Up 2: Bearish Triangle Overpowering Bullish Wedge
Holo (HOT) prices underwent a bloody weekend like every other digital asset in the cryptocurrency market.
Bitcoin Weekly Analysis: Its Do or Die After Weekend Bloodbath
Bitcoin plunged hard alongside other top-cap digital assets as traders decided to secure their profits as the market sprinted...
Survey Shows 10% Of Fund Managers Believe Bitcoin Will Outperform In 2021
Long Beach (CoinChapter): Bank of America’s latest Global Fund Manager Survey provides an interesting look into how investors view...
Another Big, Bullish, Blasting Price Rally Awaits Bitcoin; Here’s Why
Yerevan (CoinChapter.com) — Bitcoin looks to capitalize further on Coinbase’s latest foray into Wall Street even as the cryptocurrency already...
Bitcoin Between March 2020 and April 2021: What Pumped the Token By 1,500%
The benchmark cryptocurrency added $4,024, or 6.74 percent, to reach a new record high of $63,774. Its move upside...
Bitcoin Holds Steady Above $60,000; Could It Hit $65,000 on Coinbase News?
Bitcoin (BTC) cautiously climbed above $60,000-benchmark during the weekend session and continues to hold the level as interim support...