Bitcoin price eyes $22K as US PMI data hits lowest since May 2020
Bitcoin (BTC) headed for multi-day highs after the Wall Street open on August 23 as US economic data tripped the dollar.
Dollar suffers as data shows earnings ‘squeezed’
Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD as it looked at $21,700 at the time of writing, near resistance in place since last week’s nearly 12% drop.
The pair gained momentum as US Purchasing Managers Index (PMI) prints for August showed a fall compared to the previous month, hitting their lowest levels since May 2020 at the height of the first round of COVID-19 lockdowns.
“The S&P Global Flash US Services Business Activity Index was published at 44.1 in August, down from 47.3 in July, to indicate a further reduction in overall services activity,” said a press release from curator S&P Global.
“The decline in business activity was sharp overall and the fastest since May 2020. Service providers noted that interest rate hikes and inflation dampened customer spending as disposable incomes were squeezed.”
Gosh! US Composite #PMI just dropped to 45.0! It’s close #recession levels. Services PMI is down to 44.1, where an increase to 49.8 was expected. pic.twitter.com/GwSKfnOXS3
— jeroen blokland (@jsblokland) 23 August 2022
The implied slowdown in demand caused an immediate knock-on effect for dollar strength, with the US dollar index (DXY) falling from new twenty-year highs.
Conversely, the inverse-correlated DXY had rallied quickly in the previous days, coinciding with US stocks facing resistance and Bitcoin seeing several trips below $21,000.
“The August PMI Composite Index fell to 45 from 47.7 in July. It was expected to rise to 49.2, says gold campaigner Peter Schiff reacted.
“Services PMI fell to 44.1, the lowest since May 2020 and Mfg. fell to 51.3, the lowest since July 2020. The US PMI is weaker than any PMI in Europe or Asia.”
The S&P 500 and Nasdaq Composite Index were up a modest 0.25% and 0.45% respectively at the time of writing.
BTC bulls face $21,700 challenge
Analyzing what could be next for risk assets, commentators were hoping for a rally in stocks against the backdrop of a falling dollar.
Related: Bitcoin addresses in losses hit 1-month high as BTC price retests $21K
Popular Twitter account Game of Trades called the S&P 500 “extremely oversold in the near term” based on relative strength index (RSI) data.
“Watch out for any potential bullish RSI divergence it has picked up along the way,” part of a recent update read.
On Bitcoin, optimism from some has also focused on a return to the highs since June, with a “clean break” above $25,000 as the deal breaker for $28,000 or more to appear.
Are you ready? pic.twitter.com/dZ0NI1JleS
— KALEO (@CryptoKaleo) 23 August 2022
For chain analysis resource material indicators, meanwhile, $21,700 needed to be cracked as a first step.
“If we don’t see more BTC bids coming in above $21k, the downside of illiquidity (dark areas) will be exploited,” the warned along with a chart of support and resistance levels in the Binance order book.
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