Positive reactions to a $1.9 trillion stimulus package combine to crush Bitcoin’s bullish sentiment.
Bitcoin (BTC) fell below USD 35,000 on January 15, as the renewed strength of the US dollar put pressure on the larger crypt currency. BTC bounced off support at USD 34,300 and is trading at USD 35,300 at the close of that year.
BTC/USD 4-hour candlestick chart (Bitstamp). Source: Tradingview
Bitcoin is heading towards the USD 30,000
Data from Cointelegraph Markets and TradingView shows that the BTC/USD reached its lowest level in over 24 hours on Friday, with USD 34,000 so far acting as support.
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The previous day, the pair recovered to the $40,000 level for a brief moment before falling back into the range in a corridor that had formed at the beginning of the week. The latest drop reinforced the assumption that Bitcoin would continue in this corridor, which has USD 30,000 as support and USD 40,000 as a rough ceiling.
„The consolidation of #Bitcoin is very healthy for the market after the massive momentum movement to USD 41,500,“ explained Cointelegraph Markets analyst Michaël van de Poppe in a series of tweets.
„Bitcoin is approaching a rebound area here as we reject the crucial resistance of around USD 40,000. Completely healthy.
Halving analysis suggests a „7x up potential“
Bitcoin’s new recession coincided with a rebound in the US dollar currency index (DXY) as a result of President-elect Joe Biden’s $1.9 trillion coronavirus stimulus plan. Despite the severity of this US dollar supply expansion, markets seemed to react favourably to the plans, driving the DXY upwards at the expense of Bitcoin, with which it normally correlates inversely.
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„Context: the dollar is rising in multiple time frames. A fairly strong recovery in a support Bitcoin Up area of several months. Some argue that this is bad for Bitcoin, gold and risky assets, hence the narrative,“ said Cointelegraph internal analyst Joseph Young.
BTC/USD pair (Bitstamp) versus DXY (orange). Source: TradingView
Young noted that in the derivatives markets, investors who „buy the fall“ were causing them additional headaches, potentially clouding the prospects for a relief rally.
However, on a broader perspective, Bitcoin underperformed compared to previous bullish cycles. According to the on-chain analysis resource Ecoinometrics, this left the door open for more remarkable gains.
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Bitcoin price comparison after halving as of January 15 Source: Ecoinometrics/Twitter
„This bull market does not stop at USD 40k“, part of a tweet with a comparative chart.
„Since the growth of the previous cycles we still have 7 times the upside potential“.