Bitcoin could face some capitulation in the coming weeks. The Chart below is the US Dollar Index (DXY), this a perfect example of just how correlated to traditional markets Bitcoin actually is. The US Dollar Index in this chart is bouncing off a congestion area that extends all the way back to the 1980's with its most recent visit to this area being in the financial crisis of 2018. This often can lead to hard assets such as Gold, Silver and now Bitcoin having a sell of during the rise of the DXY. The capitulation you are seeing today in hard assets is directly correlated with the strengthening of the World Reserve Currency. However there is resistance between 92 and 94 on the DXY so we will see some volatile moves in all world markets.
The Chart Below is Bitcoin/USD on the 4hr timescale. What we want to see is the bulls come back in around 30-33K and respect the lower trend line in this chart. If this doesn't happen we could see a bit longer of a correction. This trend has been absolutely wild and if the DXY continues to bounce for an extended period we could see a period of sideways trading for BTC after it begins to gain some traction. The demand for Bitcoin is very high right now, so I would be incredibly surprised if this correction was more than 30-35% but hey this is crypto and we just call that a Monday around here.
The metric below is a little concerning, the Crypto Fear and Greed Index is at one of the highest points it has ever been. Be weary friends just remember to be fearful when other are greedy and greedy when others are fearful. I would like to see some of the overextended indicators have a chance to cooldown. Stay Strong Friends!
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