- Although Bitcoin (BTC) remained largely above $ 30,000, it returned to the familiar territory earlier in the week after a weekend in the new trade corridor.
Although Bitcoin (BTC) remained largely above $ 30,000, it returned to the familiar territory earlier in the week after a weekend in the new trade corridor.
With the United States just days away from the change of president, Cointelegraph made an assessment of what else could affect the BTC price action.
DXY continues to reverse losses
President-elected Joe Biden’s inauguration comes as the strength of the US dollar continues to recover.
On Monday, the US dollar currency index (DXY), which measures the USD against a basket of major trading partner currencies, reached its highest level since December 21.
The continued upside in DXY means Bitcoin growth will take a break, and this inverse correlation has been a prominent pattern throughout 2020. In the case, BTC / USD had very little to lose during the most recent gains, and most of them were preserved despite major fluctuations.
DXY was also unaffected by Biden’s decision to spend another $ 1.9 trillion on debt-financed coronavirus support, described last week as “another trillion-dollar ad for Bitcoin” by Gemini co-founder Tyler Winklevoss.
However, analysts are still supporting the dollar weakness to continue for the long run. Even traditional market participants continued to see the scope of increases in USD supply, a move that has prompted many to think of Bitcoin as an alternative store of value.
“The foreign exchange market is not different from other markets,” William Dinning, chief investment officer of UK fund manager Waverton Asset Management, told the Wall Street Journal over the weekend.
If there are a lot of potatoes, their price is cheap. If there are too many dollars, it will be weak.
However, future Treasury Secretary Janet Yellen said the United States would not deliberately aim to protect a weak dollar for business advantages.
Analyst says stocks need rest
In the markets, as the week began, stocks were indecisive and calmed down with Biden’s announcement.
Mixed performances were seen in Asia, and Wall Street on Monday, Martin Luther King Jr. US futures were slightly higher than on Friday.
The sluggish gains have been intriguing to some, although China has provided quarterly economic growth statistics that overshadow any expectations. As Bloomberg reported, the world’s second-largest economy grew 6.5% during the quarter, becoming the only major economy to prevent coronavirus contraction last year.
“Markets needed a gasp or even retreat to justify reflationary expectations,” Ben Emons, managing director of global macro strategy at Medley Global Advisors, told the publication.
Bitcoin continues to outpace traditional assets in terms of earnings in 2021, and the correlation tends more and more towards zero for both stocks and safe havens such as precious metals.
Agenda on “Altseason”
Also, breathing in the last days was unique to Bitcoin. After weeks of intense fluctuating trading conditions, traders had a quiet weekend, which was a pleasant surprise for the stock markets.
Earlier, US platforms Coinbase and Kraken experienced cuts at critical price points, and last week other trading platform eToro warned that it may need to limit its Bitcoin buy order if it generates new volatility over the weekend.
In this case, things were much quieter than expected, with BTC / USD staying spaced up or down with no real change.
As Cointelegraph Markets analyst Michaël van de Poppe points out, attention has started to refocus from Bitcoin to altcoins.
In a tweet on Monday, he reiterated his narrative that other cryptocurrencies will start to be the center of attention in the short to medium term:
At this point, this is most likely to happen. The aid is gathered in all #altcoin markets. FOMO in altcoins. #Bitcoin fixes once again -> altcoins generate HL and retest.
A look at the rankings confirmed the beginning of what is popularly called the “Altseason”, with five of the top 100 cryptocurrencies recording daily gains of more than 20% by market capitalization. In terms of weekly performance, seven tokens increased by more than 100%.
The largest altcoin, Ether (ETH), was heading towards its all-time high and at one point passed over $ 1,200 after a drop where it lost its support of $ 1,000.
However, Bitcoin’s market value dominance dropped further on Monday, reaching 66.3% compared to 69.5% at the beginning of the year.
Bitcoin price action left untouched all-time highs
For the spot market, Bitcoin was gradually reducing volatility as the week started. The past three days, $ 30,000-40,000
It saw contraction in the trading range in its corridor, with lower highs and higher lows pattern signaling a price squeeze.
As Van de Poppe noted last week, this is a welcome sign that gives the market time to compensate for the force required to eventually break the compression structure. In the case of Bitcoin, this should result in a push towards or even towards the current all-time high of $ 42,000.
Meanwhile, he told Twitter followers on Friday that, considering the longer term, he predicted that Bitcoin would be between $ 275,000 and $ 350,000 in this bull cycle. He wrote that the highest value for Ether was between $ 7,500 and $ 12,500.
Basic knowledge reaches new record levels
Finally, a familiar bull signal has returned to investors’ radar recently. A classic sign that more increases are hiding for the price, Bitcoin’s network fundamentals have reached all-time highs.
For the hash rate, which gives an estimate of the computing power dedicated to the Bitcoin blockchain, this came at 155 exahash per second (EH / s) on Sunday.
The metric has been in an almost constant rise since the end of December, adding 25 EH / s in just two weeks.
It is probably the most important underlying metric for Bitcoin, as it gives an idea of miner health and competitiveness, as the rise is related to difficulty.
After a 10.8% increase in the last auto-recalibration on January 9, the difficulty reached a new record level with 20,607,418,304,385. According to current estimates, the next reorganization that needs to be done four days later will add another 6%.
The continued upside for both indicators has traditionally been associated with price increases, which occur after a grace period that can last up to several months.