On technical indicators, Bitcoin is showing signs of life. The world’s largest digital currency by market capitalization is holding a crucial support level, which might signal the start of new bullish trends for the asset in the coming weeks and months.
Bitcoin Gains Traction
In mid-May, Bitcoin plummeted by over 6%. However, at the time of writing, the asset had gained by more than 1% and was trading in the low $27,000 range. Some feel this is due to Bitcoin’s recent reliance on the US dollar, a surprising and intriguing shift for the world’s leading digital currency. Because of the drop in the value of the dollar, BTC may have experienced a minor decline. By defending this important average, the bulls have persuaded the market that the long-term bullish trend will continue.
He also claimed that there have been many cautious purchasers in the mix recently and that if they are to return to the trading scene, bitcoin would need to improve. Others, on the other hand, are more optimistic about BTC and believe that as the dollar continues to heal and ascend through the price ranks, so will Bitcoin. Ilan Solot, co-head of digital assets at Marex, stated, “I believe the dollar is due for a bounce as markets recoup some of the Fed easing implied in the futures curve.” Over longer cycles, currencies are driven by actual growth differentials and political factors, but in the short run, it’s all about playing relative central bank policy (changes in nominal rates). Depending on how violent the dollar rally becomes, it may cause some short-term damage to assets such as commodities and cryptocurrency.
Given that it has been trading above the 102 mark since mid-March, the DXY might reach anywhere between 104 and 107… This month-long structure will eventually crack, resulting in price discovery for both assets. Bitcoin is on the up, while DXY is on the decline.
More Wallets Holding onto Coins
Solot went on to say that many long-term wallets had stored Bitcoin for at least a six-month period prior to press time. Many of these wallets have added additional assets, indicating that they believe the digital currency market will undergo more optimistic trends and price explosions in the near future.
For the most part, 2023 has been very different from 2022, which was possibly the worst year on record for Bitcoin and cryptocurrency. Over the preceding year, the world’s most valuable crypto asset lost more than 70% of its value.