The price of Bitcoin reached its lowest level in the last 80 days a few hours ago, while the US Dollar Index (DXY) continues to appear strong and has not had a noticeable downward correction for a long time.
To Report Crypto News, Bitcoin has lost 5% of its value in the last 24 hours and more than 7% in the last seven days. As it can be seen, in recent months, Bitcoin has gradually lost its credibility among some of the investors and has become worthless from their point of view. Some experts attribute the recent downward trend of Bitcoin to the state of the US stock market, which is ultimately related to investors’ fear of the continued contractionary monetary policies of the Federal Reserve and the re-increase of bank interest rates in this country. All in all, these conditions have made financial market participants more risk-averse than before; That is, investors withdraw their money from high-risk assets such as Bitcoin and stocks due to the reduction of their trust in the market.
The important stock market indices “S&P500” and Nasdaq (NASDAQ) have also fallen under the influence of the strong performance of the dollar in recent months; An event that has put downward pressure on Bitcoin and other digital currencies.
Another factor that has stood out in these few days is the closure of the Nord Stream gas pipeline by the decision of the Russian authorities, which has practically stopped part of the gas supply to Europe and has panicked the financial markets. The next effective factor is the increase in the yield of US Treasury bonds.
Since last month’s figures related to the production sector in the United States were better than what experts expected, investors’ concerns about the decision of the Central Bank of America to maintain the rate of increase in the bank interest rate and fight inflation in this way have increased, and in the bond market There are no signs of a decrease in sales and investors’ acceptance of loans.
The yield on 10-year US Treasury bonds recently rose to 3.25% for the first time since mid-June with an increase of 0.061 percentage points. As a result, investors are willing to allocate their money to buy risk-free assets, and therefore the downward pressure on the price of Bitcoin has intensified during this period.
The increasing strength of the US dollar is the most important factor
The position of the dollar index (which compares the value of the US dollar to a basket of major world currencies) recently reached a 20-year high. The reason for this is obviously the implementation of contractionary monetary policies in America; A move that has helped to grow the yield of treasury bonds of this country.
In his new report, Bloomberg said that the impact of the US central bank’s actions on the economy may continue to be greater than before. Some experts believe that Jerome Powell, the head of the US central bank, repeats the same actions as Paul Volcker. It should be noted that the implementation of contractionary policies during Volcker’s presidency at the Central Bank of America caused the country’s economy to enter recession.
If the Federal Reserve continues to reduce its balance sheet, the US dollar index may reach a new high. In a speech a few weeks ago, Powell emphasized his desire to increase the strength of the dollar and fight inflation in this way.
A continuation of Bitcoin’s downtrend could push the price to levels not seen in the market for a long time. Richard Heart, one of the influencers in the digital currency space, has predicted that the price of Bitcoin will fall to $11,000 before starting the upward trend again. Now, more than anything, investors are waiting for the publication of the inflation rate for the month of August in the United States on September 13 (22 September).
Bitcoin price analysis
Bitcoin started a new bearish move from the $20,000 level yesterday, leading to a drop to $18,540 this morning. As can be seen from the chart below, the $19,053 support has been breached by the fall of the candlestick on September 6 (15 September), after three previous price reversals. Closing today’s candle below this level can also lead to a further decrease in the price of Bitcoin in the following days.
Recently, the symmetrical triangle pattern on the Bitcoin chart has broken down; An incident that shows the bias of investors in the direction of selling their assets. If the downward trend continues, the closest support in front of the price level will be $17,685, and then it will be the support of $16,450.
On the other hand, if Bitcoin manages to rise above $19,500 once again, the way for a price jump to the $20,000 level will be opened. After that, it will be the next key resistances at $21,900 and $22,425.