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The bitcoin price has been trading in a tight range over the past few weeks.
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Bitcoin’s Fear and Greed Index has dropped to a fear level of 25.
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The US dollar index has fallen to $103.
The US Dollar Index (DXY) fell to its lowest level since June, yet bitcoin price remained in a tight range. BTC/USD was trading at $16,858, where it was for the past few days. The price is up more than 70% from its all-time high of $70,000.
US dollar index crash
Bitcoin And the US dollar has had a strong inverse correlation over the years. In most cases, bitcoin rises when the greenback retreats.
Recently, this inverse correlation has faded as bitcoin and the US dollar continue to decline. The US Dollar Index has declined from a year-to-date high above $115.
It has also crashed in the past few months after a relatively bullish Federal Reserve. At its December meeting, the Fed decided to hike interest rates to 0.50% after raising them by 0.75% in the previous four meetings. You can read more about the Fed decision here,
The Fed also indicated that it would continue to raise interest rates in the coming months. Recent numbers favor higher rates. For example, data published last week showed the economy grew 3% in the third quarter after slowing in the previous two quarters.
Additional data showed that inflation is falling at a relatively slow pace. On Friday, the Fed’s favorite inflation gauge showed it dropped in November due to a drop in gasoline prices.
Bitcoin price has also declined as the Fear and Greed Index remains under pressure. The closely watched bitcoin fear gauge remains below 30, which means investors are fearful about the state of the market.
In my view, the most accurate gauge of fear is outflow. Binance has seen outflows of over $9 billion in the past 30 days. leading in the same way crypto Banks like Silvergate have made some of their biggest outflows on record.
bitcoin price prediction
So, is it safe to buy bitcoin? The 4H chart shows that the price of BTC has been trading in a tight range over the past few weeks. It is hovering around the 16,800 level, where it has been this month. The Relative Strength Index (RSI) of Bitcoin has reached near the neutral point of 50.
Therefore, despite the collapse of the US Dollar Index, there is a possibility that it will soon have a bearish breakout. If this happens, the next major support to watch will be at $15,435, which is the lowest level in 2022. A break below that level would mean that there are still more sellers in the market.
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