Bitcoin is Finished? US Dollar says otherwise!

If traders believe that DXY will still act as a number one indicator for Bitcoin, they ought to expect Bitcoin to bounce.
China has been on a rampage trying to crackdown on cryptocurrencies, threatening banks and miners throughout the country. Over this past weekend, China ordered domestic banks and payment platforms to prevent provides services linked to trading of virtual currencies. As a result, Bitcoin has been selling off on fears that way forward for currency might not be Bitcoin, but rather simply digital fiat currencies. However, China isn’t the sole one spreading fear into crypto HODLers. An Elon Musk tweet can send Bitcoin in either direction, counting on how he feels that day. The United States government retrieved ransom Bitcoin, which until now , was thought to be untraceable. additionally , more and more officialdom within the US and round the world are calling for regulation of cryptos (governments always way their piece of your money!).

So, Bitcoin is moving lower. In February, Bitcoin began forming a rounding top formation and reached its all-time high on April 14th at 64895.22, which happened to be an equivalent day because the Coinbase IPO (coincidence?). On May 10th, the cryptocurrency began to unload aggressively and stalled near 30,000. Bitcoin consolidated during a flag pattern from May 10th to June 22nd between 30,066 and 41,341. On June 19th, the 50 Day Moving Average crossed below the 200 Day Moving Average forming a “Death Cross”, which because the name may imply, may be a bearish signal. Today, price broke below the 30,066 lows and therefore the bottom of the flag. The target of a flag pattern is that the length of the flag poll added to the breakdown point from the flag, which during this case targets near 11,500.

If we overlay a chart of DXY (blue line) on a chart of Bitcoin, it appears that the US Dollar Index has been leading BTC since February. Price in DXY formed 3 higher highs before Bitcoin. The US Dollar then began moving lower on March 30th, before the Bitcoin selloff which began in April 14th. DXY bottomed on May 25th and commenced moving higher, with a breakout on June 16th (FOMC). The US Dollar Index traced to the 61.8% Fibonacci retracement level from the March 31st highs to the May 25th lows, near 92.00. If traders expect this relationship to continue, BTC could also be certain an aggressive bounce soon. It’s difficult to work out where BTC may bounce to if it’s following DXY, as we don’t yet know if today’s low goes to be the low to live from. However, if we assume it’s , the 61.8% Fibonacci retracement in Bitcoin from the April 14th highs to today’s lows is near 51,030!

BTC by itself points to a continued selloff to close 11,500. However, the present relationship between US Dollar and Bitcoin points to a bounce to 51,030. Which is right? If traders believe that DXY will still act as a number one indicator for Bitcoin, they ought to expect Bitcoin to bounce. If traders feel the flag pattern may be a more reliable formation, BTC will move lower. Perhaps BTC won’t reach either level. However, if Bullard and Kaplan still be hawkish, while Williams and Powell still be bearish, there’s bound to be good 2-way action within the coming months in both BTC and therefore the US Dollar!