US Dollar Rebounding due to Multi-Year Support; Not Good for Bitcoin

US Dollar Rebounding due to Multi-Year Support; Not Good for Bitcoin

The price of gold and Bitcoin (BTC) is rejecting simultaneously whereas the U.S. dollar seems to have rebounded from a vital multi-year support area. Additionally, the dollar’s rally is further catalyzed by the warning issued by the European Central Bank’s (ECB) about the appreciating euro. Gold and Bitcoin prices have a negative response to the rising dollar because both assets are priced with the dollar by the markets. This means that if the value of the US dollar goes up, then the value of Bitcoin relative to the dollar will automatically drop. From its monthly opening on 1st September, the value of the dollar went up.

This caused the price of Bitcoin to reach as low as $11,160 from a high of $12,086. There has been a similar response in prices of gold, which have declined by almost 1.8% in the last two days. According to analysts, the dollar’s momentum is only going to strengthen in the long-term. The ECB announced this week that they would be looking at offsetting the increasing value of the Euro by encouraging additional monetary stimulus and controlling exports. As per currency analysts, the ECB may just continue dampening the strengthening of the value of the Euro.

This could cause the dollar to rally in the short term and this would only increase selling pressure on gold and Bitcoin. Experts say that it is unlikely that an immediate policy from the ECB could weaken the euro, but they would be doing everything possible for dampening the strength of the euro. However, forex strategists have predicted that after an initial upsurge, the euro is likely to slump against the dollar. If the euro continues to rally, then it could result in a strong reaction from the ECB. Since then, a warning has been issued by the ECB on multiple occasions against the rising euro.

Nonetheless, it remains uncertain whether the trend of the fading euro and the recovering dollar would continue. There is also a possibility that both the dollar and the euro may fall simultaneously. For now, Bitcoin traders have turned bearish cautiously after taking into account the rebounding strength of the dollar. Bitcoin traders are of the opinion that if support levels of $11,200 hold, then it could move back up to $11,600. Since 26th August, the $11,200 level has acted as a key support area for the cryptocurrency for over a week now.

Some of the Bitcoin traders said that they would be testing the lows again and if they managed to hold, then they would do another test, which could result in a possible rally towards $11,500 to $11,700. They said that if there was a breakdown, their target price would be $10,600 to $10,800. Other traders said that the dollar had managed to reclaim a massive monthly level. They added that if the dollar index continues to rally, then Bitcoin momentum would just slow down. The fact remains that things are quite uncertain right now and the prices of both the dollar and Bitcoin could move in either direction.

Jerry Dedmon

Author: Jerry Dedmon

Jerry Dedmon is a new writer on Cryptocoin Stock Exchange, his articles are cryptocurrency news, analysis and blockchain news based. We recommend tuning in for Jerry's daily posts as they are always a great and interesting read.

Leave a Reply

Your email address will not be published. Required fields are marked *