The U.S. dollar currency index caps six days of gains with fresh resistance, while stocks could give Bitcoin a fresh boost, says Michaël van de Poppe.
Bitcoin (BTC) may get a “relief” rally closer to $11,000 as stock markets recover and concerns remain over the U.S. dollar.
BTC price may fill the upper futures gap first
The rebound would follow testing times for Bitcoin, which has repeatedly dipped below $10,000 support since Friday. In line with long-term trends, the largest cryptocurrency could benefit from a shift in macro sentiment.
“Futures bounce back significantly in the U.S. Europe also bouncing back up,” Van de Poppe wrote.
“Might signal a slight relief on $BTC as well towards the area of $10,600-10,800.”
Van de Poppe previously warned that Bitcoin was not at the pit of its bearish streak, and could still fall below recent lows to hit $9,500 — filling a lower “gap” in CME Group’s Bitcoin futures market.
A rise to $10,600 would also constitute a gap fill, this having appeared over the weekend. So far, BTC/USD has failed to climb above $10,400.
Bitcoin vs. S&P 500 realized correlation 6-month chart. Source: Skew
Broker: USD gains “possible bull trap”
While progress in Bitcoin since April has begun to disappoint Brandt, so USD continues to give bearish signals to market commentators despite recent strength.
Bitcoin’s 15% plunge last week coincided with gains in the U.S. dollar currency index (DXY). Going forward, however, a mixture of Federal Reserve inflation policy and money printing is set to undermine its strength.
According to forex broker FxPro, the dollar must hit much higher levels against major currencies — the euro, pound sterling and Swiss franc — to exit its protracted breakdown.
“Without accelerated growth of the Dollar and the above levels being reached, we remain within the weakening pattern with short corrections,” it warned on Wednesday.
DXY appeared to cap its six-day winning streak on the day, hovering at near 93.6. FxPro additionally said that the gains may in fact constitute a “bull trap” — meaning that a bigger retreat may follow, wiping out progress.
U.S. dollar currency index 6-month chart. Source: TradingView