Home Markets US Dollar Strength May Have Killed Crypto’s Bullish Momentum?

US Dollar Strength May Have Killed Crypto’s Bullish Momentum?

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US Dollar Strength May Have Killed Crypto’s Bullish Momentum?

The crypto market is losing momentum as the price of Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) start trading in the red. The largest cryptocurrencies by market cap could suffer further losses as macro factors continue to exert a negative influence on risky assets.

At the time of writing, the total crypto market cap stands at $1.09 trillion after being rejected at $1.2 trillion. This resulted in minor losses for Bitcoin (2.2%) and Binance Coin (7%), only Ethereum was able to retain some of its gains from last week.

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BTC price is moving sideways on the 4-hour chart. Source: BTCUSDT Tradingview

Analyst Justin Bennett believes that the crypto market has been negatively affected by the bullish US Dollar trend. The currency saw a major upward push at the start of 2022 on its monthly chart and appears to be attempting to recover to 2022 levels over longer timeframes.

This could translate into more losses for risky assets, such as stocks and cryptocurrencies; more economic uncertainty as inflation has tended to rise for decades; less liquidity in global financial markets. Bennett said the following as share the table below:

Expect #stocks and crypto to struggle as the US Dollar does. The $DXY just exited 107 on its way to 107.40. I still think we see 112-113. Be careful there (…). The trend is your friend…unless it’s $DXY. 112-113 first, but most likely 120 in the next few months. Rising USD means lower risk assets.

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The DXY Index (US Dollar) breaks above important resistance on the monthly chart. Source: Justin Bennett

The largest crypto by market capitalization, Bitcoin, saw a yearly low at around $17,600. As reported by NewsBTC, Fidelity Macro Director Jurrien Timmer believes that this level is comparable to previous lows in the cryptocurrency and expects this price level to function as critical support.

Will Macro Factors Break Critical Support for Crypto

Using BTC’s supply and demand patterns, Timmer compared $17,600 to $3,100 and $200, two major support areas for Bitcoin even in persistent downtrends. The expert said the following on BTC’s ability to see more long-term appreciation, a bullish momentum that will surely push the entire crypto market higher:

Bitcoin’s price-to-network ratio (my proxy for a valuation multiple) has returned to 2014 levels. Meanwhile, its network continues to grow, roughly in line with a power regression curve.

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Source: Jurrien Timmer on Twitter

On the other hand, Bennett expects more losses for the price of BTC and the crypto market. The first crypto by market capitalization could bottom out between $9,500 and $13,500.

The bearish thesis of the experts is based on the current monetary policy of the US Federal Reserve (Fed). The financial institution is determined to keep inflation from rising and will continue to raise interest rates, Bennett believes, to achieve that goal.

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