- Price has already hit the $29k key resistance level.
Last week, I pointed out that the $29k area was supposed to offer support and prevent BTC from dropping lower. For those who do not understand what support levels means, it means an area in a price chart where price has a tendency of failing to break through. In other words, it is an area that most investors watch to take long/buy positions on an asset. It was expected that various investors – including individuals and institutions – would start buying BTC once its price dropped to around $29k. As seen on the chart below, Bitcoin has made a roughly 7.9% recovery starting from 0000h (GMT+3) 21st July 2021. This means that the recovery has happened within the last 33 hours.
What does this big upside move indicate?
It means certain big investors have acquired huge volumes of Bitcoin in the last 33 hours. Based on this information, it is accurate to infer that these investors believe that price cannot go further below this point.
- The dollar is testing a key resistance on the higher timeframe.
The value of BTC and every other cryptocurrency is measured against fiat currencies. The dollar is the most traded fiat currency since it is a reserve currency. Therefore, numerous CEX and DEX ask their customers to convert their fiat to USD to purchase any crypto. Also, most crypto spot markets match BTC against stable coins that are tethered on the USD. This reveals that in most cases, buying BTC requires one to sell the USD. When analyzing the price of BTC, it is important to pay attention to what is happening to the dollar.
As shown on the chart below, the dollar formed a double tops pattern on the 1hr chart at a major resistance level. While the chart was downloaded in the early hours of the 22nd July 2021, the USD price plunged significantly later in the day while BTC gained with the same intensity. Therefore, with the dollar signaling a possible reversal to the downside in the next few weeks, BTC is likely to benefit from this potential weakness on the reserve currency.
What does this mean?
It means that a depreciation of the US dollar’s value could result to an appreciation of BTC. Therefore, if USD continues to depreciate, BTC will be at an advantageous position.
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