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Bitcoin Forecast: BTC Price Breaking Out as US Dollar Crumbles

Bitcoin Forecast: BTC Price Breaking Out as US Dollar Crumbles

2020-07-29 13:30:00
Rich Dvorak, Analyst
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BITCOIN FORECAST: BTC/USD PRICE BOOSTED WITH PRECIOUS METALS AMID US DOLLAR NOSEDIVE

  • Bitcoin price action blows past key technical resistance as BTC/USD jumps 20% in a week
  • Bullish market activity underpins top cryptocurrencies and precious metals as USD weakens
  • The FOMC decision on deck and potential for a US Dollar reversal leaves Bitcoin at risk

BTC prices have ripped higher over the last few trading sessions. Popular cryptocurrencies – such as Bitcoin, Ethereum, Ripple, and Litecoin – are soaring with the US Dollar pacing a big drop for July. Bitcoin performance appears to have benefited from mounting demand for traditional anti-fiat assets like gold and silver. This largely stems from a staggering rise in the global money supply due to the coordinated policy response from governments and central banks, which flooded the financial system with cash.

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An increase in the supply of money causes its value, or price, to decline assuming all other variables are held constant. That said, it is of little surprise that non-traditional currencies with limited or fixed supplies, including bitcoin and gold among other anti-fiat assets, have climbed considerably over recent months.

US DOLLAR IMPLOSION SENDS BITCOIN SURGING WITH GOLD & SILVER PRICES IN ANTI-FIAT BID

Bitcoin Price Chart BTC Performance vs Gold Silver US Dollar Index

Chart created by @RichDvorakFX with TradingView

While the US Dollar implodes, and the direction of precious metals goes parabolic with gold and silver trading higher by 28% and 35% respectively year-to-date, less-loved Bitcoin has begun to reel in market attention and play catch up to its anti-fiat peers. The recent resurgence of Bitcoin and other cryptocurrencies has catapulted BTC price action higher by more than 20% since I highlighted potential for a topside pennant breakout on June 16.

Bitcoin MIXED
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Change in Longs Shorts OI
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Weekly -1% 6% 0%
What does it mean for price action?
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BITCOIN PRICE CHART: DAILY TIME FRAME (07 FEB TO 28 JUL 2020)

BTC Price Chart Bitcoin Forecast

Chart created by @RichDvorakFX with TradingView

Bitcoin priced in USD currently fluctuates around $11,000 and follows the explosion above its pennant pattern resistance line formed by a string of lower highs since May. That constructive technical setup, which was also underpinned by a Bollinger Band squeeze, helped provide BTC/USD price action with a big enough boost for the cryptocurrency to surmount its prior 2020 swing high near the $10,600-level.

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Looking ahead, Bitcoin could continue its steep climb fueled on the back of its bullish anti-fiat narrative. Conversely, an aggressive rebound attempt staged by the US Dollar, which is underscored by FOMC correction potential in the wake of a scheduled Fed meeting announcement this Wednesday, might strongarm Bitcoin back lower.

Learn More – Bitcoin vs Gold: Top Differences Traders Should Know

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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