Up in the Air

Crypto Compass 59

“When prosperity comes, do not use all of it.” - Confucius

• BTC climbed 2% to $26.75k, ignoring the continued rally in the US Dollar Index, as spot buyers shook out negative derivative bets. BTC's rise was sparked by spot market buyers, who triggered market buying and a short squeeze, or bears covering their bearish futures bets, pushing prices even higher.

• BTC suggests new attempts at the key $27.15k level are possible with an overbought RSI in the short-term. However, a flip in sentiment in the risk asset market could mean a retest of support around $25k. The $20k area is a target for the bears.

Figure 1: BTC's price evolution with Cipher B, RSI and ATR indicators.

• The dollar-wrecking ball is on its way back. The Dollar Strength Index (DXY) reached its highest level in nearly ten months. Contrary to the practically consensus bearish dollar thesis, this is a robust move that has finally reached a natural location for consolidation.

• DXY must begin to cool off and retest the previous resistance as potential support for BTC to recover. However, higher market liquidity tends to favour BTC long-term since investors may seek refuge in alternative assets to hedge against slow economic development.

Figure 2: DXY’s price evolution with Cipher B, RSI and ATR indicators.