Bitcoin tops above $21,000, pushing the total crypto market cap back above $1 trillion
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(Kitco News) – Bitcoin (BTC) and the crypto market got a much-welcome reprieve in early trading on Friday as a drop in the DXY sent green across global financial markets threatening to snap a three-week losing streak for Wall Street.
Data from TradingView shows that after hovering near support at $19,200 for most of Thursday, the morning trading session on Friday witnessed a 10.7% price increase that saw BTC hit a high of $21,370 before bears were able to perform little resistance.
BTC/USD 4-hour chart. Source: TradingView
Bitcoin’s move higher sent the top crypto to a two-week high, according to Senior Kitco market analyst Jim Wyckoff, who noted that “BC bulls have quickly gained momentum as they have at least temporarily negated a price downtrend on the daily bar chart.”
Going forward, Wyckoff said bulls need to “show important follow-through strength over the next few days, suggesting a near-term market bottom is in place.”
As a result of the gains across the crypto market, the total market capitalization managed to climb back over $1 trillion, coming in at $1.036 trillion at the time of writing.
The dollar is stumbling
David Lifchitz, Managing Partner and Chief Investment Officer of ExoAlpha, provides further insight into Friday’s surprise move in BTC. He directly pointed to the pullback in the DXY as the driving force behind today’s move.
“U.S. stock futures, European stocks and pretty much all risk assets rose on Friday morning as the dollar finally stumbled, falling by its most in a month to its lowest level in September, after hitting an all-time high just two days earlier, ” said Lifchitz in a conversion with Kitco Crypto.
Before the move higher, Lifchitz warned that global actions by central banks to “raise interest rates to fight inflation provided a lot of headwinds for risk assets in 2022, including Bitcoin.” This is particularly true of the US Federal Reserve, “which is so far ahead of its peers in terms of tightening that it has strengthened the USD, thus weighting the Bitcoin price in USD.”
Friday’s decline in DXY naturally led to gains in Bitcoin, as Lifchitz noted, “with the BTC/USD pair, if the USD goes up, BTC mechanically goes down and vice versa.”
What’s next for BTC and the broader crypto market largely depends on how the Fed handles rate hikes going forward, according to Lifchitz.
“After the violent USD run it pulls back and BTC jumps… so imagine what it will be when the FED stops wandering or even eases rates… BTC back to the moon (or almost).”
For now, it’s a waiting game to see how the Fed acts. It was just two days ago that the central bank “warned of the risks they perceive in loosening monetary policy too soon … and they are expected to raise interest rates by another 75 bps at their next meeting on September 21,” Lifchitz noted.
Meanwhile, crypto traders are enjoying the widespread green after a tough road so far in 2022 and looking forward to the arrival of spring after a harsh crypto winter.
The total cryptocurrency market cap is now at $1.036 trillion, and Bitcoin’s dominance rate is 38.8%.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
