Bitcoin (BTC) had a very turbulent week when the price of Bitcoin jumped from $ 32,000 to $ 38,500 and back by about $ 33,000 within 24 hours.
The first increase to $ 38,500 came just minutes after Elon Musk added #Bitcoin to his Twitter profile.
However, no repercussions of this price action were seen on the cards, as bitcoin dropped significantly over the next few hours. For now, the $ 34,500 area is a great resistance to break out if the market wants to maintain bullish momentum.
Failure to break $ 38,000 causes rejection
The levels you should see are highlighted in the diagram above. Simply put, for the rally to continue, you need to break $ 38,000. Changing this level of support unlocks new permanent positions.
However, yesterday the growth could not continue. After the $ 38,000 level failed, the $ 34,000 level failed to provide much-needed support for further recovery.
Therefore, “Elon Musk Pump” can be considered intermittent, and the general trend continues. This is a downward trend from a peak of $ 42,000 and will likely continue unless the price of bitcoin surpasses $ 34,500 and makes it supportive.
Dollar Shows Strength – Bad News For Bitcoin
One of the main arguments for Bitcoin’s further shortage is the extraction of the US Dollar Currency Index (DXY). This indicator shows the formation of a potential bottom as it shows a bullish divergence at 90 pips.
Thereafter, the bullish rejection will be confirmed by a higher lower level, indicating the possibility of further advance.
Notably, the previous increase in DXY satisfaction in September triggered a 20% pullback in Bitcoin. However, after this comfortable rally, the DXY showed tremendous weakness, which is one of the main variables in the huge rise in the bitcoin price to $ 42,000.
However, February is not the best month for stocks. The same can be done with bitcoin, as it did in February 2018 when bitcoin dropped to $ 6,000 after hitting a full-time high.
As such, a rebound in DXY could exacerbate Bitcoin’s downward trend in February as well.
Bitcoin Dominance Index Expects Significant Rise
Historical charts show past market behavior with multiple cyclical patterns.
When Bitcoin took over as dominance in December, the altcoin market faced huge obstacles. However, after such a massive increase, a health correction will not come as a surprise to test previous resistance levels.
These tests will mark the return of Bitcoin dominance in February, which could open up for a massive tour across the cryptocurrency market starting in March.
Critical levels for finding bitcoins
The critical levels are easy to see in the chart above. First, the bitcoin price should rise to $ 34,500 in support of continued bullish momentum. If this happens, the level will be retested at $ 38,000. This test is likely to result in a breakout of over $ 38,000 towards a permanent high.
However, if the bitcoin price does not exceed $ 34,500, there is likely to be more bearish momentum as shown in the chart. From this point of view, the critical level is the $ 30,000 range. If it doesn’t hold support (after many tests already), I expect to see a drop to $ 25,000 and a 21-week moving average.