Bitcoin bulls lie in wait as US dollar strength hits 5-month lows

Market Analysis

Bitcoin (BTC) continued to hold key support on Dec. 2 as United States stocks fell on the Wall Street open.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

DXY weakness offers hope of “Santa rally”

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as bulls bought time between $16,800 and $17,000.

Analysts had earmarked the former as a key level to retain, this nonetheless in question at the time of writing as stocks shed 1% to start the session.

Popular crypto analytics account Nunya Bizniz queried whether it was time for a “decision” on S&P 500 performance, eyeing a pattern which suggested a local top may soon appear.

Should that be the case, Bitcoin’s correlation to traditional risk assets would be tested, this having ebbed in the wake of the FTX meltdown.

For the meantime, however, the inversely-correlated U.S. dollar gave bulls little to worry about, the U.S. dollar index (DXY) hitting five-month lows.

DXY wicked down to just 104.37 on the day before rebounding above 105 at the Wall Street open.

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView

Fellow analyst Pumpcat thus eyed the six-month close for the chart due at the end of December.

“I think the probablity for a longterm correction is high from here on,” he predicted.

Another popular Twitter analytics account, Cold Blooded Shiller, additionally entertained the idea of a “Santa rally” should macro data and comments from the Federal Reserve complement risk asset performance — to the dollar’s detriment.

“Markets are clearly at an important point – both the $DXY looking like freefall + markets like $SPX looking to try and break the major trendlines that have kept them capped,” a further tweet on the day added.

Analyst reinforces $19,500 significance

Eyeing potential for upside, trader and analyst Rekt Capital stuck with $19,500 as the ceiling for Bitcoin on monthly timeframes.

Related: Bitcoin miner outflow ratio hits 6-month high in new threat to BTC price

BTC/USD finished November down 16.2%, having broken through support to trade in a new range in the wake of FTX.

“BTC lost $19500 as support. But it hasn’t turned it into a new resistance,” he wrote.

“Technically, $BTC could relief rally to as high as $19500 to turn it to a new resistance. That would be a textbook confirmation of the breakdown. Doesn’t have to happen but a possibility.”

BTC/USD annotated chart. Source: Rekt Capital/ Twitter

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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