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.
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.
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.”
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.
YEREVAN (CoinChapter.com) – Bitcoin (BTC) price stood at just over $28,000 in Thursday’s New York session, after crashing over...
Our Partners
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.