Bitcoin $BTC$63,888.86 and the Dollar Index (DXY) are moving in opposite directions, with the latter on the verge of a major move that may embolden crypto bears.
The largest cryptocurrency is under pressure for a third straight day, trading near $63,900 and down nearly 1% since midnight UTC. The broader market is mostly showing similar losses, with the exception of a few tokens such as HASH, XLM and ENA, which gained 7% or more.
The Dollar Index, which tracks the U.S. currency's value against major fiat currencies, has gained 0.26% to 100.66, extending Wednesday‘s 0.8% rise. What’s notable is that the index is now on the verge of firmly breaking out of a 13-month-long trading range.
This type of setup usually leads to more momentum chasing by traders, resulting in further gains. Strength in the greenback typically weighs on dollar-denominated assets such as bitcoin.
$BTC has historically tended to move in the opposite direction to the dollar. Its 90-day correlation coefficient with the DXY was recently minus 0.82.
The greenback is clearly benefiting from the hawkish tone struck by the Fed on Wednesday, which has raised concerns interest rates may rise in the U.S. Should it continue to gain ground, $BTC is likely to remain under pressure and potentially revisit the pivotal 200-week simple moving average at $62,258.
Economists at crypto exchange Kraken told CoinDesk that dips below that average have historically produced a median return of over 100% in one and three years. Other analysts, meanwhile, anticipate a deeper selloff on a potential break below the average. Stay alert!
Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk's “Crypto Week Ahead.”
Whats trending
- U.S. and Iran sign initial agreement to end war but tougher talks lie ahead (CNN): The agreement commits the U.S. and Iran to achieving a final deal within 60 days. It also allows Iran to export oil and spells out provisions for reopening the Strait of Hormuz.
- Warsh overhauls how the Fed talks and keeps markets guessing on rates (WSJ): The new Fed chair trimmed the bank's policy statement, declined to submit a rate forecast of his own, and launched five task forces to study everything from how the Fed communicates to how it analyzes the economy.
- Bitcoin, ether slide after a hawkish Fed, even as Trump's signed Iran deal lifts stocks (CoinDesk): Analysts expect bitcoin to remain range-bound between $60,000 and $70,000 absent a major catalyst.