The US Dollar could put a damper on Bitcoin’s bullish case scenario despite its current strength and the possibility to reach the $20,000 price level again as we are reading more in the latest Bitcoin news.
BTC is more bullish than even because the digital narrative takes hold during the tail end of the pandemic. The top cryptocurrency is opposed to the dollar and it is very sensitive to the extreme price movements in the currency. The flight to cash caused Black Thursday and another flash-type move will be upcoming soon as a part of the aggressive attempt to save the dollar. There are two separate narratives that dominate the financial world especially this year. the first one was the weakening dollar which caused a whole lot of money printing in response to the pandemic and many social issues as well. The US dollar as a global reserve currency is losing that role slowly.
The second narrative was the emergence of BTC as digital gold. Gold was the most wanted asset that investors who were bearish on the Dollar turned to. But with BTC acting as a better version of the gold, the dollar could weaken even more. BTC became the best performing asset in 2020 and this trend will only continue into the future but in the short-term, the DXY dollar currency index could signal a fast reversal in the cryptocurrency. Today’s DXY candle triggered a TD9 buy signal while the last time this showed up was during Black Thursday as investors cashed out everything they had into USD in panic.
However, looking into the high timeframes, things are not looking bullish for the DXY and suggest any pullbacks will be fast but will be over extremely fast as well. Right now, the US dollar could damper Bitcoin’s bullish case as it continues to dive and Bitcoin continues to climb confidently. This led to some of the most overbought conditions for BTC to ever be created and also the most oversold conditions in the fiat currency which makes it the perfect storm for a strong reversal.
Bitcoin users learned over the years that once crypto sentiment becomes bearish, reversals take place. At this point, few traders are bullish on the dollar and believe that It will make a surprise move that will be extremely effective. But other investors don’t agree. Right now, BTC trades perfectly into the inverse notion and a surprise turnaround in the dollar could happen due to extremely oversold conditions combined with the surprise turnaround in BTC due to similarly overbought conditions.
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