After a crash down to nearly $89,000, the Bitcoin (BTC) price recovered strongly, making back all the losses and ending the day at over $94,000. Was this the last chance for the bears? Can the price go back to the all-time high?
Has the Dollar Index (DXY) now topped out?
In the macro world things were not looking good for risk assets like Bitcoin. The Dollar Index (DXY) touched $110, and the yield on the 10 year U.S. government bond reached 4.8%. A very strong dollar was in evidence, and risk assets were suffering because of it.
Source: TradingView
The DXY chart above tracks the US dollar against a basket of other major currencies. Generally, if the US dollar is strong, this is not good for assets, and especially risk assets. The monthly chart shows a descending trendline that goes back to March 1985, so nearly 40 years. Also, the current price has reached a very strong horizontal resistance of $110. A rejection from here would be quite likely. Although, if the price did punch on through, the breakout could be catastrophic from a global economic perspective. As things stand, the incoming Trump administration would be much more likely to favour a weaker dollar so that recession can be avoided and the economy can grow.
From despair to hope
Source: TradingView
At around 15:00 UTC +1, things were not looking good for Bitcoin. The $BTC price had fallen through the head and shoulders neckline, and also through the ascending trendline that goes back to April 2021. It really looked as though this long-time reliable support was now going to be broken as the price fell to around $89,300.
However, the bulls had other ideas and from this point the recovery began to take place. Not only did the price get bought up above the ascending trendline, and also the head and shoulders neckline, but it ended the day just about where it started. Now we have a nice long candle wick under the price, and a breakout of $100,000 is back on the table.
Bitcoin healthy consolidation
Source: TradingView
The weekly chart for Bitcoin shows that the price is continuing to rise strongly. This will either end in a breakout of the descending trendline, or a rejection of the same. Whichever way it goes, price is still consolidating sideways, and after the rapid rise from the breakout of the long descending channel below, a healthy period in which to allow the market to absorb that rally is still taking place.
The Relative Strength Index at the bottom of the chart is showing a slight uptick in the indicator line. If the bull market is to continue, the indicator line will need to push up and the descending trendline will have to be broken.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
