Bitcoin (BTC) struggled to recapture the $20,000 level at the Wall Street open on July 12as the US dollar cooled its rise to fresh two-decade highs.
The bullish trend of the dollar takes a new breath
Data from Cointelegraph Markets Pro and TradingView revealed a tug-of-war between buyers and sellers following the seven-day lows for the BTC/USD pair.
The intraday losses came at the hands of a runaway US Dollar Index (DXY), which hit its highest levels since October 2002 at the expense of risk assets thanks to inverse correlation.
A subsequent pause gave US equities room to breathe, with both the S&P 500 and Nasdaq paring losses on the day.
Good to note how quickly risk assets tend to move up when $DXY even goes down the slightest amount.
Way more responsive to DXY’s downside than it’s upside.
When DXY does cool down we’re due for some solid bounces I reckon.
— Daan Crypto Trades (@DaanCrypto) July 12, 2022
It’s good to look at how quickly risky assets tend to rise when DXY dips the slightest.
It is much more sensitive to the fall of DXY than to its rise.
When DXY cools off, we are in for some solid bounces I think.
However, with the July 13 Consumer Price Index (CPI) print in the spotlight, the optimism surrounding cryptocurrencies in shorter timeframes was barely perceptible.
For popular Crypto trader and analyst Ed, there was “more pain to come” for both BTC and stocks.
“There is a very small chance that we will see a double correction towards $24,000 or $25,000,” he forecast in a new video update, analyzing potential Elliott wave moves after Bitcoin’s spike to $22,400 last week.
However, the chances of significant relief were “small”, with the option of a “trend down” also on the table.
Bitcoin hodlers face ‘remarkable pressure’
For on-chain analytics firm Glassnode, meanwhile, there were already signs from the market that Bitcoin might be in the latter part of its bear cycle.
In the latest edition of your weekly newsletter, “The Week On-Chain”, analysts stated that long-term holders – those least likely to capitulate – were under “remarkable pressure” to sell.
However, there was still room to fall if Bitcoin was to repeat previous bear market behavior.
“The current market structure bears many hallmarks of the late stage of a bear market, where higher conviction pools, long-term holders and miners, are under notable pressure to give up”he concluded.
“Losing supply volume has now reached 44.7%, of which the majority is held by the cohort of long-term holders. However, this remains at a less severe level compared to previous bear cycles.”
Charts supporting the thesis include the Long-Term Holder Exit Profit Ratio (LTH-SOPR), a metric that tracks the average profit or loss of LTH coins being spent. LTH addresses are those that hold the coins for at least 155 days.
“LTH-SOPR is currently at 0.67, indicating that the average LTH their coins spend is locking in a 33% loss,” Glassnode noted.
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