The bitcoin (BTC) price headed towards $23,000 on February 3 after a night of losses wiped out the latest progress from the bulls.
Dollar bounce puts a stop to the cryptocurrency party
Data from Cointelegraph Markets Pro and TradingView showed that The BTC/USD pair reached lows of $23,329 on Bitstamp.
The pair had broken out of a second trip above the $24,000 mark at the Wall Street open on Feb. 2; buyers failed to maintain momentum amid macro market volatility.
In classic style of interest rate announcements by the US Federal Reserve, an initial move was soon countered; bitcoin returned to its previous position.
Conditions worsened on the back of a rebound in US dollar strength; the US dollar index (DXY) staged a striking reboundwhich began to consolidate on the day.
“Once the DXY finds support and starts bouncing hard, we will see pullbacks on our crypto exchanges,” warned popular Crypto trader Tony.
“It’s time to pay attention.”
For his part, Michaël van de Poppe, Cointelegraph Contributor, foresees that a level of 102 for the DXY causes inversely correlated declines in all risk assets.
“I think the DXY is likely to retest in the future what was support and is now resistance,” continuous Matthew Dixonfounder and CEO of cryptocurrency rating platform Evai, in his own analysis.
“This would align with my converse expectation that Btc and crypto will move down a bit before a final blowoff high (although I don’t think it will be much higher).”
The CPI is worrying again
Some believe that the macroeconomic pressure on prices could continue until February.
In its latest market update sent to subscribers of its Telegram channel, the trading firm QCP Capital paid particular attention to the upcoming release of the US Consumer Price Index (CPI), scheduled for February 14.
“After the FOMC, we have a lot of second-tier data, including the important ISM services and NFPs. However, the decisive data will be the CPI for Valentine’s Day, and we believe there are upside risks,” he said.
“First, the Cleveland Fed’s inflation forecast shows a number above 0.6% for January, even though it has overstated inflation in recent months.”
Thanks to a change in the way the CPI is calibrated, QCP suspects that the next 2023 figures could be higher than what the market expects. Whether psychological or not, the net impact could disappoint crypto bulls.
“In Europe, a similar reweighting has triggered a rebound in the January CPI released this week. Therefore, we expect downside risks to materialize from here, either at this meeting or after the next CPI release,” QCP added.
According to data from the CME Group’s FedWatch Tool, Consensus remained firm that the next rate hike in mid-March will be identical to February’s 25 basis points.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.