Bitcoin traders fear a bear market comeback: Look at the US dollar
Bitcoin (BTC) remained flat at the February 6 Wall Street open as analysis showed an “interesting dynamic” at play on BTC price charts.
Bitcoin: Gold cross meets death cross
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it ignored the start of US equity trading to hold near $22,800.
The pair had seen flashes of volatility heading into the weekly close, leaving levels near six-month highs above $24,000.
Bitcoin thus worried market participants as the week began, with a growing number eyeing a potential retest of $20,000 or lower.
For chain monitoring resource material indicators, attention was now directed to two classic chart features: a “golden cross” on daily time frames and a “death cross” on weekly time frames.
Representing the interaction between the 50- and 200-day moving averages, golden and death crosses traditionally indicate upcoming bullish and bearish moves, respectively.
It is so notorious that automated trading tools can buy or sell as needed should one or both events occur.
“The moment it happens, a golden cross on the Bitcoin D chart could trigger some buying. Likewise, a pending Death Cross on the W chart would trigger some algotrading robots to sell,” Material Indicators wrote in a tweet on the day.
It also highlighted upcoming comments from Jerome Powell, chairman of the US Federal Reserve. Due on February 7, signals about inflation policy contained in Powell’s words could easily move markets.
Continuing on the chart crossings, Material Indicators co-founder Keith Alan described them as an “interesting dynamic development.”
“Bitcoin is heading towards an eminent Golden Cross on the D chart which is short term bullish and may trigger some TA algos to buy. We are also heading towards a death cross on the W chart which is long term bearish,” he tired in his own tweet.
Rebounding dollar strength is “bad news” for crypto
On the macro front, US stocks fell slightly at the open, with the S&P 500 and Nasdaq Composite Index losing 0.8% and 1.1%, respectively. Asian stocks had also ended the day lower.
Related: Is BTC Price About to Retest $20K? 5 things to know in Bitcoin this week
The US Dollar Index (DXY), meanwhile, continued its rally in a move that threatens to further squeeze risk assets.
The index was trading above 103.6 at the time of writing, the highest since January 9, when analysts began to fear for the health of the crypto rally.
“It seems that the dollar is trying to regain its annual rally,” the popular trader and analyst Roman in summary.
“This is bad news for crypto and stocks because it will indicate a pullback / continuation of the bear market. This week is very important. A reversal of the trend, $SPX loses 4100 and I return to macro bearish.”
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
