Home Coins Ethereum (ETH) Bitcoin price nears final hurdle at $12K before bull market euphoria

Bitcoin price nears final hurdle at $12K before bull market euphoria

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The price of Bitcoin (BTC) had to hold the crucial support level between $11,100-11,300, and it did. After this support test, the price of BTC continued to surge upward on Oct. 20, reaching the crucial resistance area between $11,900-12,200.

This upward move came along with weakness in the dollar, as the U.S. Dollar Currency Index (DXY) dropped substantially. A correlation that’s been effective throughout 2020 already. 

However, other cryptocurrencies haven’t been following in Bitcoin’s footsteps as altcoins are selling off heavily. Is the attention shifting back to Bitcoin? 

The weekly level at $12,000 is the crucial level to break 

XBT/USD 1-week chart

XBT/USD 1-week chart. Source: TradingView

The weekly is showing one massive crucial level that’s been a hurdle for Bitcoin in the previous years. It’s the resistance area between $11,700-12,300. If that level is broken to the upside, a strong move toward $17,000 is likely to occur.

It would also mean the start of the new cycle with more and more arguments to be made at the beginning of a new bull cycle. 

However, it doesn’t mean that a breakthrough is imminent as the construction is ripe for further range-bound movements. The main argument for a breakout upward would be the weakness of the U.S. Dollar.

The U.S. Dollar has been showing weakness since the massive crash in March 2020, causing the prices of gold, silver and Bitcoin to surge heavily.

DXY Index on the tipping point of further downwards momentum

U.S. Dollar Currency Index 1-day chart

U.S. Dollar Currency Index 1-day chart. Source: TradingView

The DXY is a great indicator to derive momentum on other “safe haven” assets like gold, silver and Bitcoin. Of course, when there’s a definite crisis occurring on the markets, the run to cash and the dollar is expected. 

However, in the recent period, there’s been a run out of the dollar. One of the primary arguments for this DXY weakening is the infinite QE provided by the FED, announcing trillions in new stimulus packages. 

As the dollar has been showing weakness, Bitcoin continued to climb since the March crash. Similarly, the U.S. Dollar Currency Index rejected at 94.64 points in recent days and continued its freefall. 

The last support level to hold is the 93 points area. If that is lost, new lows will be imminent for the U.S. Dollar currency index, which would only add momentum for Bitcoin. 

Gold has been doing extremely well in times of USD uncertainty

Gold vs. DXY Index 1-week chart

Gold vs. DXY Index 1-week chart. Source: TradingView

As the chart shows, the dollar has been showing weakness ever since the Dot.com bubble popped and started to retrace heavily.

During this period, the strength of gold intensified and the price surged 600% amid the USD’s weakness. In the first part of the crisis (2000, which also saw a run toward cash), gold dropped 30%, but then its strength increased after this dropdown. 

Such a correlation has also been seen in Bitcoin recently as BTC has been moving in lockstep with gold in recent months. A conclusion can be drawn that investors seek safe assets as a hedge against a weakening U.S. Dollar.

What about altcoins?

BTC Dominance 1-day chart

BTC Dominance 1-day chart. Source: TradingView

Altcoins are getting crushed by the recent moves in Bitcoin. Whether BTC goes up or down, it doesn’t matter. Altcoins are dropping like stones.

That’s not entirely a strong signal for the markets as it indicates that the focus is around Bitcoin. The moment that Bitcoin goes up while altcoins are getting sold off means that there’s money flowing from altcoins into Bitcoin. If that occurs and Bitcoin makes a small move, it doesn’t show much strength. 

In that regard, markets move in cycles where the fourth quarter of the year is typically a terrible quarter for altcoin investors. History shows that the dominance chart of Bitcoin moving up in that quarter and topping out in December.

This chart aligns with the Ether (ETH) chart against Bitcoin, as this one frequently bottoms out in the December period. 

Moving forward, It’s very likely to see Bitcoin’s market dominance surge upward from here, with altcoins selling off further. Critical indicators for the markets in the short term are the strength of Ether, and thus altcoins, against Bitcoin and the overall movements of the U.S. Dollar Currency Index. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Mr Bitcointe
Mr Bitcointehttps://www.bitcointe.com/
“Fact You Need To Know About Cryptocurrency - The first Bitcoin purchase was for pizza.” ― Mohsin Jameel
USD - United States Dollar

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