After yesterday’s decline, bitcoin showed an impressive recovery and climbed 20% from local lows of around $ 30,500 to $ 36,600. However, analysts believe that it is too early to talk about a resumption of the rally, especially against the backdrop of another rejection at a key level.
Asset manager of Pictet Asset Management Julien Bittel believes that the dollar is now “very oversold”. The American currency has been declining for a long time in 2020 amid the coronavirus pandemic and the measures taken by the authorities to stimulate the economy.
“I think a stronger dollar will be a key motive in 2021. Speculators are sitting on near-record short dollar (DXY) volume as a percentage of total open interest. The current DXY decline is very similar to 2017-2018. This analogy suggests that equilibrium may return by the end of the first quarter of 2021, ”Bittel says.
Over the past months, Bitcoin has established a visible inverse correlation with the dollar. In particular, the rise in the price of cryptocurrency at the end of 2020 began simultaneously with the advancement of the DXY to new multi-year lows. Thus, the potential strengthening of the dollar could pose a threat to Bitcoin’s uptrend.
Funding rates on futures remain elevated, indicating the continuing risks of large liquidations and accelerated downward movement in the event of a long position squeeze.
The CEO of the CryptoQuant analytical platform, Ki Yong Joo, claims that the situation in the bitcoin market has not radically changed compared to yesterday.
“Miners are selling, there are no significant inflows of stablecoins, no outflows are visible from Coinbase, and 15,000 BTC has been transferred to exchanges since yesterday,” he writes. “We can see another dump.”
Analyst Michael van de Popp says the $ 37,000 level, from which bitcoin bounced lower today, was key for a bullish continuation. He sees mid-term support around $ 32,750, from where, in his opinion, Bitcoin will go to retest $ 30,000.