Bitcoin fell very hard over the weekend and Monday after reaching $ 42,000 last week. The cryptocurrency’s decline came when the US dollar index jumped around 0.7%.
The current recovery coincided with the decline in the US dollar index.
Analysts say it’s important to keep track of the progress of this market.
Bitcoin could lose as the US dollar strengthens
Bitcoin fell extremely hard over the weekend and Monday after reaching $ 42,000 last week. The cryptocurrency fell sharply to $ 30,000 Monday from the aforementioned highs and liquidated billions of positions.
Some stated that the decline in the market was based on macro trends.
Bitcoin’s decline on Monday coincided with the weakness in the strength of foreign currencies, which has been on the rise against the US dollar over the past few months. The US dollar index jumped around 0.7%, a big move for a trillion market.
BTC’s recovery over the past few hours coincided with the drop in the US dollar index.
Many analysts say it is now important to track where this index goes to determine the overall direction of the crypto market.
An analyst using the name @ledgerstatus on Twitter recently shared the graphics below and pointed out that Bitcoin’s next move will likely be determined by the US dollar.
The US dollar rally has called for additional incentives for the American people, despite new president Joe Biden. He said he wanted trillions of incentives for the economy and $ 2,000 in incentive checks for the public.
The US dollar rally could come as a result of Congress approval of Biden’s election win, which could have deterred fear of further conflict in the Capitol.
A wind has gone
It is worth noting that a significant wind is going for Bitcoin, which could trigger a higher rally.
Willy Woo, an analyst who studied chain data, said the drop after the correction was apparently a downward byproduct of Coinbase. He explained the matter as follows:
“Spot market sales started at around $ 38,000, then Coinbase partially failed, did not record purchases and caused its price to drop below $ 350 from others, which lowered the index price futures exchanges used to calculate the leverage fund, paving the way for a decline in speculative markets.”
Coinbase is now back and the funding rate / futures market has regained some sense of normality.
As this bearish factor disappears, Bitcoin can continue to rise.
Other trends that could boost cryptocurrency include hidden corporate buying demand. Analysts have interpreted online that larger players have accumulated a large amount during today’s downturn, as can be seen from the order book trends and data on the chain.