While Bitcoin faces the major technical resistance of $31,000, it is again correlation factors that will decide the continuation of the trend, finally making it possible to decide between failure and the end of a bear market below 31. $36,000 or acceleration of the yearly uptrend towards $36,000. These correlation factors are acting in the wake of the US inflation update this week.
The fundamental key is the US dollar following inflation this week
How to achieve the preservation of the annual upward trend in the price of BTC, more than 80% rebound since last January, accompanied by a sharp increase in the dominance of BTC? It is this question that the technico-fundamental analyst that I am claims to answer.
Facing the dimension of the $31,000 resistance (probably the last string in the bow of the bear camp, the one that has long been targeting $12,000), BTC needs support from all of its cross-asset factors to hope for a breakout.
Within all the parameters that have a positive or inverse correlation effect on the price of bitcoin, let’s keep in mind that two have a very powerful and structuring impact on the underlying trend of bitcoin:
- The inverse correlation with the trend of the US dollar against a basket of major currencies ;
- The inverse correlation with nominal and real interest rates in the credit market.
💡 Find exclusive analyzes of Vincent Ganne on Cryptoast Research every day
Take your investments to the next level with the analyzes of Vincent Ganne
The first graph below illustrates this negative correlation, recalling in particular that it had played a crucial role in triggering the bear market from November 2021.
And it is precisely this week that the US dollar (DXY) and US market interest rates are immediately impacted by updated US inflation figures. While the consumer inflation rate (CPI) fell to 3% in its nominal version, the underlying version is still too high, but has finally taken a downward turn, falling to 4.8%. Thursday’s Producer Price Update (PPI) is expected to put downward pressure on the US Dollar with factory gate price growth approaching zero year-on-year.
Whatever happens, it is essential, if not imperative, that the US Dollar establishes a new yearly low to consider that the price of bitcoin is able to overcome the resistance at $ 31,000.. As for market bond rates, they must remain below the levels that triggered the crisis of American regional banks at the beginning of last March.
Bitcoin Price in Weekly Data with Dollar (DXY) Forex Trend and US 2-Year Bond Interest Rate
The decision will soon be made vis-à-vis the pivotal resistance of $31,000.
For the past 3 weeks, the proximity of major resistance at $31,000 has been the dominant technical factor in the crypto market. Remember that this chartist obstacle represents the last valid argument of permabears, those who live in the greatest frustration of not having seen their target of 12,000 dollars reached in the wake of the bankruptcy of FTX in the fall of 2022.
In order to break through such resistance, only a close on the weekly time horizon can constitute an overflow signal, which would then engage the target of $36,000, the highest selling liquidity in the market.
Closing price in weekly data of Bitcoin with the measure of its short-term volatility
👉 How to buy Bitcoin (BTC) in 2023?
Buy crypto on eToro
Chart source: Trading View
Receive a summary of crypto news every Monday by email 👌
What you need to know about affiliate links. This page may feature investment-related assets, products or services. Some links in this article may be affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no impact on you and you can even get a bonus by using our links.
Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and could not be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to crypto-assets are risky in nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
AMF recommendations. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your ability to lose part of this savings. Do not invest if you are not ready to lose all or part of your capital.
To go further, read our Financial Situation, Media Transparency and Legal Notices pages.