Bitcoin Weekly News – Latest Updates

Bitcoin continues to trade in the opposite direction to the Dollar Index in a reflection of the cryptocurrency’s maturation as a macro asset like gold. The top cryptocurrency by market value slumped to $32,400 early on Monday, having set record highs above $41,800 on Friday. The crash came alongside a bounce in the Dollar Index (DXY), which tracks the greenback’s value against major currencies. The DXY has jumped to two-week highs near 90.50, extending a two-day winning streak. The index reached a 33-month low of 89.21 on Jan. 6, according to TradingView. Since the major markets crash in March, bitcoin (BTC, +1.79%) and the index have trended in opposite directions, with bitcoin witnessing consolidation or correction during DXY’s temporary recovery rallies.

Bitcoin News
Bitcoin News

“Bitcoin’s value increased as the money supply and inflation expectations grew. At the same time, the dollar depreciated to multi-year lows, resulting in an inverse correlation between the government-backed fiat and decentralized digital asset,” Kaiko Research noted in its December market report. Bitcoin’s price fell from $12,000 to $10,000 in early September and remained sidelined for the rest of the month as the dollar index bounced from 91.75 to 94.75. Similar action was observed in June 2020. The cryptocurrency’s rally resumed in October as the foreign exchange markets began selling the dollar on expectations of additional U.S. fiscal stimulus. A steep drop in the DXY accompanied the cryptocurrency’s meteoric rise from $15,000 to above $41,000 seen over the past two months or so.

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Bitcoin’s Price

BTC to USD, rallied by 15.8% in the week ending 10th January. Following on from a 25.6% breakout from the previous week, Bitcoin ended the week at $38,200. It was a bearish start to the week. Bitcoin fell to a Monday intraweek low $28,540.0 before making a move. Steering clear of the first major support level at $27,594, Bitcoin surged to a Friday intraweek high and a new swing hi $41,969.0. Bitcoin broke through the first major resistance level at $36,608 and the second major resistance level at $36,608 on the way to a new all-time high.

A bearish end to the week, however, saw Bitcoin fall back to end the week at sub-$39,000 levels. In spite of the pullback, however, Bitcoin avoided a fall back through the second major resistance level at $36,608. 4 days in the green that included an 8.17% rally on Wednesday and a 7.18% gain on Thursday delivered the upside.

What’s Next?

Bitcoin would need to move back through $36,236 pivot to support a run the first major resistance level at $43,933. Support from the broader market would be needed for Bitcoin to break back through to $40,000 levels. Barring an extended crypto rally, resistance at last week’s new swing hi $41,969 would likely cap any upside. In the event of another breakout, Bitcoin could test resistance at $45,000 before any pullback. The second major resistance level sits at $49,665. Failure to move back through the $36,236 pivot would bring 23.6% FIB of $33,008 and the first major support level at $30,504 into play.

Barring another extended sell-off, however, Bitcoin should steer clear of sub-$30,000 support levels. The second major support level sits at $22,807. At the time of writing, Bitcoin was down by 8.79% to $34,844.0. A bearish start to the week saw Bitcoin slide from an early Monday morning high $38,277.0 to a low $33,642.0. Bitcoin left the major support and resistance levels untested at the start of the week.

Bitcoin’s Volatility over the Weekend

Bitcoin slid as much as 21% over Sunday and Monday, its biggest two-day decline since March, under pressure from investor risk aversion that also undermined equities while the dollar rallied. However, Bitcoin is still up roughly 89% over the past month. Cryptocurrencies tumbled on Monday, wiping off nearly $140 billion in total market cap, as traders took profits on the spectacular rally so far this month in light of a stronger dollar and growing political uncertainty. Investors will be keeping a close eye on a possible impeachment of President Donald Trump and a surge in COVID-19 cases in Asia.

Bitcoin plunged as much as 21% over Sunday and Monday, its biggest two-day decline since March, though the cryptocurrency is still up roughly 89% on a trailing one-month basis. Ethereum fell 12%. The smaller coins XRP and Litecoin shed about 18% each. The fall in cryptocurrencies on Monday wiped nearly $140 billion off the entire market. Last week, the overall cryptocurrency market rose above $1 trillion for the first time. Bitcoin last week hit a record high above $41,000, swept up by the combination of a weaker dollar, economic optimism, and a wave of bullish sentiment toward cryptocurrencies as big-name investors and investment banks touted a potential for huge gains this year.

Political Uncertainty and How it Affects the Crypto Market?

Political uncertainty has mounted, knocking investor risk appetite for assets such as stocks and commodities. House Democrats have said they’re prepared to impeach Trump again after he encouraged a right-wing mob that stormed the Capitol building last week. “The horror of the ongoing assault on our democracy perpetrated by this President is intensified and so is the immediate need for action,” House Speaker Nancy Pelosi wrote to colleagues on Sunday. Strategists at Rabobank said in a note that “the stronger dollar and higher bond yields has also sparked a plunge in Bitcoin and in gold prices this morning.”

Bitcoin and other cryptocurrencies, similar to many commodities, tend to do the opposite of whatever the dollar is doing. The correlation between Bitcoin and the dollar index was at -0.95, meaning the two are more likely to move inversely. Correlation is measured between 1.0 and -1.0. The former signifying that the two assets are prone to moving in perfect tandem. The dollar was up 0.4% against a basket of major currencies. It was trading at its strongest in almost two weeks after plumbing 33-month lows last week.

Ethereum, the second-largest cryptocurrency by market capitalization after Bitcoin, fell 11.4% on the Bitfinex exchange, where trading volume was the largest, according to Bloomberg data. The price held at about $1,128, within sight of last week’s three-year high of about $1,350. However, experts believe that all of this is just temporary. Once the smoke clears, things should return to normal. There is no long-term reason why politics should affect the value of Bitcoin.