Bitcoin (BTC) is back on familiar ground as the week kicks off after spending a weekend ranging in over $ 30,000 in the new, albeit large, trade corridor.
With the United States presidential inauguration just days away, Cointelegraph is looking at what else can be done to shake up BTC’s price action.
DXY continues to roll back losses
President-elect 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, hit its highest level since December 21.
The sustained upward trend in DXY usually means that Bitcoin’s growth is taking a breather, and this inverse correlation forms a striking pattern throughout 2020. In the event that BTC / USD had little to lose during the latest gains, the majority of which was despite the enormous volatility.
DXY was also unimpressed by Biden’s decision spend another $ 1.9 trillion in debt-funded coronavirus support, something that was described last week as “another multi-trillion dollar ad for Bitcoin” by Gemini Exchange co-founder Tyler Winklevoss.
However, as Cointelegraph reported, analysts still favor the dollar’s long-term weakness. Even traditional market participants continued to see the size of USD supply increase, a move that has shocked many to view Bitcoin as an alternative store of value.
“A foreign exchange market is no different from any other market,” said William Dinning, chief investment officer of UK fund manager Waverton Asset Management. told the Wall Street Journal over the weekend.
“If a lot of potatoes are available, it will be cheaper. When a lot of dollars are available it gets weak. “
Nonetheless, new Treasury Secretary Janet Biden has said the US will not intentionally pursue a weak dollar for trade benefits.
Shares need rest, says analyst
In the markets, the stocks showed indecision as the week went on, having calmed down after Biden’s announcement.
Asia had a mixed performance, and with Wall Street yet to open at press time, US futures were slightly higher than Friday.
The moderate earnings were curious to some, despite the fact that China had provided fourth-quarter statistics on economic growth that diminished expectations. As Bloomberg reported, the world’s second largest economy grew by 6.5% during the quarter, making it the only major economy to avoid a contraction from the coronavirus last year.
“Markets needed a breather or even a retreat to justify the reflationary expectations,” Ben Emons, general manager of global macro strategy at Medley Global Advisors, explained upon publication.
As Cointelegraph reported, Bitcoin will continue to surpass all traditional assets in gains in 2021, with the correlation tending towards zero for both stocks and safe havens such as precious metals.
Spotlight on “Altseason”
Bitcoin itself is also taking a break in recent days. After weeks of highly volatile trading conditions, investors were treated to a quiet weekend, which was also a welcome surprise on the stock markets.
Previously, US platforms Coinbase and Kraken had faced outages at critical prices, and fellow trading platform eToro last week that it may have to limit Bitcoin’s buy orders if the weekend causes new volatility.
In the event, things were much quieter than expected thanks to the remaining BTC / USD range with no real changes up or down.
As an analyst for Cointelegraph Markets Michaël van de Poppe noted, attention began to shift from Bitcoin to altcoins instead.
In a tweet On Monday, he reiterated the story that other cryptocurrencies would be in the spotlight in the short and medium term. He summarized:
“Most likely will happen at this point, is the following. Relief is everywhere in the #altcoin markets. FOMO on altcoins. #Bitcoin corrects one more time -> make altcoins HL and retest.
A look at the rankings confirmed the beginnings of what is colloquially referred to as ‘Altseason’, with five of the top 100 cryptocurrencies by market cap booking daily winnings of more than 20%. In terms of weekly performance, seven tokens were up more than 100%.
Ether (ETH), the largest altcoin, was on its way to record highs, climbing back past USD 1,200 after a dip that saw it lose USD 1,000 support at one point.
With that, Bitcoin’s market cap dominance continued to decline on Monday, reaching 66.3% from 69.5% at the start of the year.
Price action leaves the highest points ever unaffected
For the spot market, Bitcoin volatility steadily decreased at the beginning of the week. Over the past three days, we have seen a narrowing of the trading range within the $ 30,000- $ 40,000 corridor, with a pattern of lower highs and higher lows known as compression taking over.
Such as Van de Poppe noted last week, this is a welcome sign that the market is giving time to recoup the strength needed for the ultimate compression structure breakthrough. In the case of Bitcoin, this should result in a push to or even through its current all-time highs of $ 42,000.
Considering the longer term, he prediction that in this bull cycle, Bitcoin would get between $ 275,000 and $ 350,000. For Ether, the top was between $ 7,500 and $ 12,500, he told Twitter followers on Friday.
For fellow analysts filbfilbMeanwhile, there was still some way to go before any form of significant upside volatility returned to Bitcoin.
Interesting fractal going on here. Turn break 40k and turn into support and it’s a full moon mission, ”he summarized for subscribers to his dedicated Telegram channel, highlighting a map structure that allows a journey to the top of the trade corridor.
‘When the fractal sets in, we can pump it to 40 km and then return. Break the chart and turn it into resistance and we may have to play more in this range. “
Fundamentals hit new record highs
Finally, a known bull signal has returned to investors’ radar in recent days. A classic sign that the price is even more upside down, Bitcoin’s network fundamentals hit new all-time highs.
For hash rate, which provides an estimate of the computing power allocated to the Bitcoin blockchain, this came in the form of 155 exahashes per second (EH / s) on Sunday.
The statistic has risen almost constantly since the end of December, Add 25 EH / s in just two weeks.
Just as bullish difficulty was, arguably the most important fundamental measure of Bitcoin, as it provides an insight into the health and competitiveness of miners.
After an increase of 10.8% on the last automatic adjustment on January 9, the difficulty level hit a new high of 20,607,418,304,385. The next adjustment, due in four days, will add another 6% according to current estimates.
Continued gains for both indicators have traditionally been associated with price gains, which occur after a grace period that can last several months.