Bitcoin price is struggling to overcome resistance between $28,000 and $30,000 per coin. However, BTC and the US dollar appear to be following a similar pattern as they both did in late 2020, which led to the most recent bull run in cryptocurrencies.
Check out this DXY versus BTCUSD comparison you cannot afford to miss and see why it could signal the official end of crypto winter.
Bitcoin Price Consolidates Below Resistance
Bitcoin price is currently trading at just below $28,000. Despite a lack of continued momentum at resistance, there has also been a distinct lack of a rejection.
In a market as volatile as crypto, prices rarely linger in a tight range very long. And when they do, the release in volatility is always worth the wait.
Due to a lack of a more prominent pullback, BTCUSD has consistently made higher highs and higher lows. Losing the current level would break that structure and a rounded support that’s been building for years. Holding it, however, could produce a move much like late 2020, when BTC when from $10,000 to $60,000 per coin.
The comparison below shows that much like BTCUSD struggled with $12,000 resistance then ultimately went explosive the moment if finally broke the key level, a decisive push beyond $30,000 per coin could do the same.
Will a similar divergence in the two assets form? | BTCUSD on TradingView.com
Why The DXY Dollar Index Says Crypto Winter Is Done
If price action holds at current levels, the rounded support structure would also begin to take on a parabolic shape. Bitcoin in the past has went on parabolic rallies that lasted 12,000% or more. The most recent parabolic climb lasted for 1,200% ROI.
In the comparison above, we can see that in 2020 the DXY broke below what would be the same rounded support that BTCUSD is forming now. Once again, the DXY is ready to penetrate the rounded bottom. When the top cryptocurrency by market cap held and the dollar fell further, all the ingredients were there for an incredible bull run.
The DXY is an index of the US dollar trading against a weighted basket of other top currencies like the pound and yen. Although it has nothing to do with Bitcoin or crypto, it tells the market when the dollar is strong or weak. With USD being one half of the BTCUSD trading pair, the dollar being weak currently is a boon for Bitcoin and crypto.
If the DXY falls further, much like the inverse correlation in the comparison above shows, Bitcoin could skyrocket to new all-time highs.
This looks like a repeat of 2020 minus a pandemic
DXY vs #Bitcoin comparison pic.twitter.com/imSzY8aVrW
— Tony “The Bull” (@tonythebullBTC) May 8, 2023
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Tony “The Bull”
Tony “The Bull” is a level 3 CMT student (passed level 1 & 2), technical analyst, Bitcoin supporter, and avid speculator. Tony is deeply fascinated by core market principles such as Elliott Wave Theory as they tie into mathematics like Fibonacci ratios. Market timing though DeMark indicators, Ichimoku, Gann tools, or Hurst Cycle Theory are also of key interest. Tony provides completely original content driven by exclusive, independent research. For more insights and education from Tony, check him out on Twitter or in his free TonyTradesBTC Telegram channel. Follow @TonyTheBullBTC on Twitter and search CoinChartist on YouTube.