Bitcoin trader fears a bear market comeback: Watch the US dollar
2023.02.06 11:46
Bitcoin (BTC) stayed motionless at the Feb. 6 Wall Street open as analysis showed an “interesting dynamic” in play on BTC price charts.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Bitcoin: Golden cross meets death cross
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it ignored the start of United States equities trading to stay near $22,800.
The pair had seen flash volatility into the weekly close, abandoning levels nearer its six-month highs above $24,000.
Bitcoin thus worried market participants as the week began, with an increasing number eyeing a potential retest of $20,000 or lower.
For on-chain monitoring resource Material Indicators, attention now turned to two classic chart features: a “golden cross” on daily timeframes and a “death cross” on weekly timeframes.
Representing interplay between the 50- and 200-day moving averages, golden and death crosses traditionally indicate upcoming bullish and bearish moves, respectively.
Such is their notoriety that automated trading tools may buy or sell as required should one or both events occur.
“At the moment it occurs, a Golden Cross on the Bitcoin D chart could trigger some buying. Likewise, a pending Death Cross on the W chart will trigger some algotrading bots to sell,” Material Indicators wrote in a tweet on the day.
It also highlighted upcoming comments from Jerome Powell, chair of the U.S. Federal Reserve. Due on Feb. 7, cues over inflation policy present in Powell’s words could easily move markets.
Continuing on the chart crosses, Material Indicators co-founder Keith Alan described them as an “interesting dynamic evolving.”
“Bitcoin is headed for an eminent Golden Cross on the D chart which is short term bullish and could trigger some TA algos to buy. We are also headed for a Death Cross on the W chart which is longer term bearish,” he stated in his own tweet.
BTC/USD annotated charts with golden and death crosses marked. Source: Keith Alan/Twitter
Dollar strength rebounding is “bad news” for crypto
On the macro, U.S. stocks were down slightly at the open, with the S&P 500 and Nasdaq Composite Index losing 0.8% and 1.1%, respectively. Asian stocks had also finished the day lower.
Related: Is BTC price about to retest $20K? 5 things to know in Bitcoin this week
The U.S. Dollar Index (DXY), meanwhile, continued its rebound in a move threatening to pressure risk assets further.
The Index traded above 103.6 at the time of writing, its highest since Jan. 9, as analysts began to fear for the health of the crypto rally.
“It appears the dollar is attempting to reclaim its yearly uptrend,” popular trader and analyst Roman summarized.
“This is bad news for crypto & stocks because it will indicate a pullback / continuation of bear market. This week is very important. A reclaim of trend, $SPX loses 4100, & I turn back to macro bearish.”
U.S. dollar index (DXY) 1-day candle chart. Source: TradingView
