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Bitcoin Price May Extend Rally if US Dollar Selling Pressure Persists

Bitcoin Price May Extend Rally if US Dollar Selling Pressure Persists

2020-08-11 02:00:00
Dimitri Zabelin, Analyst
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Bitcoin Price, BTC/USD Analysis, US Dollar Forecast – TALKING POINTS

  • Bitcoin price on a daily chart shows cryptocurrency flirting with crucial ceiling
  • Weekly chart shows a myriad of resistance shelves potentially obstructing BTC
  • US Dollar weakness, strong risk appetite has been catapulting Bitcoin prices

Bitcoin Forecast

Bitcoin is hovering just below the second layer of a two-tiered resistance range between 11975.03 and 12320.40. New support appears to have been found at 10953.00 after BTC/USD jumped over 11 percent and closed above this range on July 27. This marked the biggest one-day rise since April 29. If momentum remains strong and the upcoming resistance zone is cleared, BTC/USD’s rise may be amplified.

BTC/USD – Daily Chart

Chart showing BTC/USD

BTC/USD chart created using TradingView

Looking at a weekly chart shows that despite breaking below the March uptrend, Bitcoin strength continues to push prices higher. BTC/USD has just climbed above 11540.76 and may gear up to challenge a one-year swing-high at 12320.40. Beyond that lie two more formidable layers of resistance, but their invalidation could catalyze wide-spread speculation of another rise with similar magnitude to the spike in 2017.

BTC/USD – Weekly Chart

Chart showing BTC/USD

BTC/USD chart created using TradingView

Having said that, Bitcoin’s volatile nature makes it susceptible to extreme price swings. This may in turn render near-term technical levels ineffective. In the global selloff of risk-oriented assets in March, BTC/USD plunged almost 50 percent in a manner of days. The cryptocurrency’s volatility is further amplified in an environment where market sentiment can turn on a dime and cause significant cross-asset price fluctuations.

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Why Has Bitcoin Risen?

This also brings us to the question as to why the price of Bitcoin continues to rise. There appears to be two factors that are creating a positive feedback loop for BTC. The first is an elevated threshold for risk appetite amid aggressive stimulus measures by monetary and fiscal authorities. The sense of urgency and assurance from policymakers appears to have created an accommodative environment for risk-taking.

The second is a weak US Dollar that has come under pressure in large part due to this change of sentimental circumstance. With priorities shifting from minimizing or avoiding losses to generating higher returns, capital flew out of the US Dollar and into assets with qualities of the latter. Until this dynamic shifts, BTC/USD may continue to climb.

--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter

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

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