It’s been a rough week for the cryptocurrency market, mostly because Terra Ecosystem Collapses And its knock-on effects on Bitcoin, Ethereum, and altcoin prices, as well as the panic selling that occurred after stablecoins lost their peg to the U.S. dollar.
Bearish headwinds in crypto markets have been building since late 2021 as the U.S. dollar strengthened and the Federal Reserve signaled that it would raise interest rates throughout the year.
According to a recent report from Delphi Digital, DXY’s 14-month RSI is now “crossing 70 for the first time since the upswing from late 2014 to 2016.”
This is notable because 11 of the 14 previous events “caused the dollar to strengthen about 78% of the time over the next 12 months,” suggesting that the pain in the asset could get worse .
On average, the DXY gained about 5.7% after the RSI rose above 70, and from today’s reading, “this would bring the DXY near 111, its highest level since 2002.”
Delphi Digital says,
“Assuming the correlation between DXY and BTC remains relatively strong, this won’t be good news for the crypto market.”
Bitcoin is in a key zone for price bottom
Taking a more macro approach, Bitcoin (bitcoin) is now retesting its 200-week exponential moving average (EMA) near $26,990, which “has historically been a key area for price bottoms,” according to Delphi Digital.
Bitcoin also continues to hold above its long-term weekly support range of $28,000 to $30,000, which has proven to be a strong support area during the recent market turmoil.
While many traders have been panic selling in recent days, Pantera Capital CEO Dan Morehead has bucked the trend, notice That is, “It’s best to buy when prices are well below trend. Now is one of those times.”
“Since December 2010, Bitcoin has only been this ‘cheap’ or cheaper relative to the trend 5% of the time. If you have the emotional and financial resources, that’s a different story.”
However, Delphi Digital issued a warning, stating that “the best opportunities or ‘deals’ in the market won’t last long.”
Since BTC has been trading in the $28,000 to $30,000 range for an extended period, “the longer we see price increases in these areas, the more likely it will be a further continuation.
“Weekly and volume structure support at $22,000-$24,000” and “2017 all-time high retest of $19,000-$24,000” are the next major support areas if it falls further.
Delphi Digital says,
“Early signs of surrender are starting to show, but we can’t say we’re close to the point of maximum pain yet.”
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