The downside movement risks are growing as Bitcoin sold off at $38,000 again, despite continuing the weekly bull run. The cryptocurrency was met with modest selling pressure as the price attempted to hit a short-term resistance level as we are reading more in our Bitcoin news today.
The number one cryptocurrency touched $38,000 before going lower ahead of the European market open. This market another attempt in less than a week to take the bullish stance, raising the possibilities of a potential double top formation on some shorter timeframes. The Double top formation occurs once an asset forms a high price two consecutive times with the decline being moderate over the past two peaks. This increased the chances to revisit the support that is common between two peaks followed by an extended bearish breakout.
BTC is halfway forming the double top setup that was confirmed by the latest pullback from the $38,000 level so if the pattern holds well, the cryptocurrency risks dropping to the support levels that are seen on the horizontal support level in the red. This is near the $32,500 level but it could vary based on recent bearish wicks. In the meantime, a breakout attempt will likely turn the support level into a resistance level and could then provide more selling pressure as the price looks for double top targets.
The recovering US dollar index provides even more tailwinds for a potential BTC pullback but this index increased against the expectations and took cues from a positive growth outlook in the US and Europe. Bitcoin trades inversely to the dollar and could ease the gains of the dollar continues going up. But the Downside movement risks are growing because the dollar Is trying to close above its 20-week moving average.
Long-term, the US dollar could continue feeling the pressure from the dovish policies that are imposed by the Federal Reserve and the government’s 1.9 trillion stimulus package and this could reduce the greenback’s purchasing power in favor of BTC, gold, or stocks. Mike McGlone from Bloomberg said:
“The support base has risen toward $30,000 on increasing institutional adoption and the potential for the benchmark to become a global reserve asset, outweighing risks of failure. Fintech and greater speculation is the broader crypto-market narrative.”
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