Its’ been a rough week for the cryptocurrency market, mainly since of the Terra environment collapse and its ripple effect on Bitcoin, Ethereum and altcoin costs, plus the panic offering that occurred after stablecoins lost their peg to the United States dollar.
The bearish headwinds for the crypto market have actually been constructing given that late 2021 as the United States dollar acquired strength and the United States Federal Reserve hinted that it would raise rate of interest throughout the year.
According to a current report from Delphi Digital, the 14-month RSI for the DXY has now “crossed above 70 for the first time since its late 2014 to 2016 run up.”
This is noteworthy since 11 out of the 14 circumstances where this formerly taken place “led to a stronger dollar ~78% of the time over the following 12 months,” which indicates the possibility that the discomfort for properties might become worse.
On average, the DXY acquired approximately 5.7% after its RSI increased above 70, which from today’s reading “would put the DXY Index just shy of 111, its highest level since 2002.”
Delphi Digital stated,
“Assuming the correlation between the DXY and BTC remains relatively strong, this would not be welcoming news for the crypto market.”
Bitcoin is at an essential location for price bottoms
Taking a more broad view method, Bitcoin (BTC) is now retesting its 200-week rapid moving average (EMA) near $26,990, which has “historically served as a key area for price bottoms” according to Delphi Digital.
Bitcoin is likewise continuing to hold above its long-lasting weekly assistance variety of $28,000 to $30,000 which has shown to be a strong location of assistance throughout the current market chaos.
While numerous traders have actually been panic offering in current days, Pantera Capital CEO Dan Morehead has taken a contrarian method, noting that, “It’s best to buy when price is well below trend. Now is one of those times.”
“Bitcoin has been this “cheap” or less expensive relative to pattern just 5% of time given that Dec 2010. If you have the psychological and funds, go the other method.”
A word of care was used by Delphi Digital, nevertheless, which kept in mind that “the best opportunities or ‘deals’ in the market are not around for long.”
Since BTC has been trading in the $28,000 to $30,000 variety for a prolonged time period, “the longer we see price build in these areas, further continuation becomes more likely.
If further decline occurs, the “weekly structure and volume structure support at $22,000 to $24,000” and the “2017 all-time high retests of $19,000 to $24,000” are the next significant locations of assistance.
Delphi Digital stated,
“Early signs of capitulation are starting to bleed through, but we can’t say we’re nearing the point of max pain just yet.”
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