Bitcoin fights key trendline near $20K as US dollar index hits new 20-year high
Nothing can keep the U.S. dollar index (DXY) down this year, and concerns over its impact on assets beyond crypto are spreading.
Bitcoin (BTC) found a new focus just under $20,000 on July 14 as U.S. dollar strength hammered out yet another two-decade high.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
DXY moves bring yen, euro into focus
After briefly dipping under $19,000, the pair took a flight above $20,000 before consolidating immediately below that psychologically significant level.
For on-chain analytics resource Material Indicators, it was now “do or die” for BTC price action when it came to a key rising trendline in place since mid-June.
On the day, that trendline stood at around $19,600, with BTC/USD now preserving it as support.
— Material Indicators (@MI_Algos) July 13, 2022
Significant gains meanwhile looked less likely for crypto markets thanks to the day once more being ruled by the U.S. dollar.
After tanking following the CPI print, the U.S. dollar index (DXY) returned with a vengeance to post its highest levels since 2002 — a phenomenon which had characterized much of the year.
The new peak measured 108.64, an increase of over 1% versus the 24-hour lows.
U.S. dollar Index (DXY) 1-hour candle chart. Source: TradingView
Beyond the short-term negative impact for Bitcoin and risk assets, USD strength was also bad news for other major world currencies, with the Japanese yen particularly in focus for BTC commentators
“Yen getting battered again today. Bank of Japan frozen in place, waiting for Fed reversal. Until then, they will continue to destroy their currency because they have no other option,” popular Twitter account Stack Hodler argued on the day.
“BoJ + Yen is a glimpse into the future for ECB + Euro. Are you seeing why Bitcoin matters yet?”
As Cointelegraph reported, some believe that the Fed will likewise have no choice but to halt inflation-busting interest rate hikes toward the end of 2022.
“In response to today’s CPI print which showed broad-based and accelerating inflation, short-term FF futures moved upward implying peak FF of 3.68% by 12/22 with the @federalreserve immediately thereafter cutting rates to reach 2.9% by 1/24,” investor and hedge fund manager Bill Ackman wrote in part of a Twitter thread in reaction to the CPI data.
“Implicitly the market expects a more aggressive Fed will push us into recession by year end and then cut rates in response.”
Little belief in an altcoin rebirth
Turning to altcoins, flat progress over the past 24 hours was no reason to assume prices could not drop more, one analyst warned.
In fresh updates on the day, Il Capo of Crypto predicted bearish moves for at least two tokens in the top ten cryptocurrencies by market cap.
Ether (ETH), for example, was threatening a return to a three-figure price tag.
Testing previous ATH as resistance and forming a corrective move. Bearish.
Clean break below $1k = $600-700 pic.twitter.com/5qRscCVQ5G
— il Capo Of Crypto (@CryptoCapo_) July 14, 2022
“Support broken and now tested as resistance. Very bearish,” he commented.
Data from research firm Santiment nonetheless shed light on the potential for a possible rebound of an altcoin, which had “dropped harder than most” this year.
#Cardano‘s price is down 69% in 2022, and this has caused social sentiment toward the #8 market cap asset to drop harder than most. The last time the crowd was this negative in Jan, $ADA rebounded +24% in 5 days until sentiment turned positive again. https://t.co/4BLpLNDraG pic.twitter.com/mJgnhtpB1V
— Santiment (@santimentfeed) July 13, 2022
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