Image of the US dollar burning down, cryptocurrency.
Positive reactions to a $1.9 trillion stimulus package sent the bitcoin price sliding today.
The Bitcoin price briefly fell below $35,000 today, 15 January, after a seemingly strengthening US dollar put pressure on the world’s largest cryptocurrency. However, the price of BTC found a support level at $34,300 that cushioned the sudden drop somewhat. At the time of writing, the Bitcoin price is thus trading at a price of just under $36,000.
Bitcoin price chart, as of 15.01.2021
BTC/USD trading pair on the 4H chart. Source: Tradingview
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Bitcoin price slump brings $30,000 back into play
Just yesterday, the Bitcoin price was able to retest $40,000, making a bullish scenario in the form of a continuation of the uptrend more likely. But today Bitcoin proved once again that you should never be too sure of your case.
So today’s dip has brought a possible bearish scenario back into play and the Bitcoin price is once again trading in a corridor that had formed earlier in the week. This currently has $30,000 as the floor and $40,000 as the ceiling.
However, even though this slide is again causing uncertainty in the market, it is also healthy. For example, Michaël van de Poppe noted in a series of tweets that the bitcoin price consolidation is very healthy for the market after we witnessed the massive momentum move to $41,500.
In short, this is not necessarily a bad sign for the BTC bulls in the market and in the long run, everyone actually agrees, things can only go up for the number 1 cryptocurrency.
Halving analysis offers prospect of 7x
The renewed downturn from the Bitcoin price coincided with a bounce in the US Dollar Currency Index (DXY), which stands on the shoulders of President-elect Joe Biden’s $1.9 trillion stimulus programme. Despite the severity of this US dollar supply expansion, markets appeared to react positively to the plans, leading the DXY higher at the expense of bitcoin, to which it typically has an inverse correlation.
Analyst Joseph Young summarised events as follows:
The dollar breaks out on multiple time frames. A pretty strong rally at a Bitcoin Trader multi-month support area. Some argue this is bad for bitcoin, gold and risk assets […].
Young also noted that in derivatives markets, investors „buying the dip“ were causing additional headaches, which could dampen prospects for a relief rally.
However, if we zoom out, the bitcoin price has so far underperformed compared to previous bull cycles, so few believe that $42,000 has already been the end of the line, despite a possible correction. According to the on-chain analytics resource Ecoinometrics, this fact gives hope for further significant price increases in BTC.
This bull market doesn’t stop at $40k,
Ecoinmetrics commented in their tweet, and provided a chart of what they believe could follow.
Chart of the possible Bitcoin price trend after the 3rd halving
Possible bitcoin price trajectory after the 3rd halving. Source: Twitter, Ecoinmetrics
It went on to say:
From the growth of the previous cycles, we still have 7x upside potential.