Bitcoin’s strength over the last few days has now hit a wall as the dollar threatens to break to the upside, with EURUSD falling 0.41% as of 11:00 am BST and GBPUSD falling 0.21%.
US players have been selling USD on rallies recently, as US and UK Inflation data has surpassed expectations. This has helped BTC, but every time we see USD fall, traders have been willing to buy USD based on raised Covid concerns: A dampening of economic sentiment and raised inflation expectations.
This has slowed Bitcoin's advance and given us a quiet trading session, as well as a lack of news: The dollar is now front and center as we look for BTC to launch another pass at $50,000.
Additionally, Bitcoin's strong correlation to emerging market currencies, RMB and INR, remains intact, with 4 hourly correlations remaining north of 80%. Hong Kong residents have been piling into China’s RMB at a rate unseen since 2014 (before China’s shock devaluation). Equally, expectations of a strong India manufacturing-led recovery is keeping INR Bid.
Both these RMB and INR flows, despite the USD strength vs EUR, JPY, and GBP, are supportive of an underlying emerging market and what should be a positive BTC sentiment during the next few weeks.
Watch out for extreme USD buying versus EUR, JPY, and GBP, which could trigger some speculative shorting and profit-taking in BTC.
The golden cross yesterday has pushed Bitcoin to a high of $48,467 on the day. TA gave us an edge finally, and we saw follow through price action to the upside. Bitcoin support is seen at $47,045 , $45,235, and $44,150, with overhead resistance at $50,315, $52,925, and $57,000–$58,000.
Bitcoin is reasonably stable in comparison to some alt coins (Algo+8%, Matic +8%, Sushi +18%, and ETH +6%, trading to its highest high in a week). The Total Market cap today is back up to $2.2tn, with DJIA 34,814 +0.68%, and gold holding $1,775 support.
Price action remains positive as we broke through the topside of the parallel rectangle. Intraday resistance is at $49,400 and $50,315. A classic X-A-B-C-D pattern is forming, with a target of $51,775 which is the 0.886 retrace of the El Salvador high then dump to swing low. Retail investors have been sidelined from recent moves and may be forced back into the market as alts drive a buying frenzy. We will see if Bitcoin respects the TA.
There is no change on the longer timeframe, as the MACD is in positive territory and the RSI is at 56%. Support is seen at $42,600 and $40,000, with resistance at $51,100 and $57,145.
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It looks like crypto isn’t correlated to traditional markets, at least not during this past session.
Investors aren’t ready to give up on equities yet.