Bitcoin price hits a daily low of $18,840 as the dollar continues to strengthen
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BTC/USD 4-hour chart. Source: TradingView |
Traders in the crypto market experienced a brief period of
climbing prices early on Tuesday before the bottom fell out of the market as
concerns that the Federal Reserve’s rate-hiking campaign to fight inflation
will result in an economic downturn.
Chicago Fed President Charles Evans attempted to ease these
concerns while speaking at a forum in London, saying that the U.S. central bank
will need to raise interest rates by at least another percentage point this
year but does not see the labor market heading into "recession-like"
conditions.
Despite these reassurances, global markets trended lower in
the afternoon on Tuesday, with the Nasdaq closing with a minimal gain of 0.25%
while the S&P and Dow closed down 0.21% and 0.43%, respectively.
Data from TradingView shows that Bitcoin (BTC) briefly
climbed above support at $20,000 in the early trading hours only to come
crashing back down to a daily low of $18,840 in the afternoon trading session
before bulls arrived to bid it back above support at $19,000.
This early morning move higher was addressed in the morning
Bitcoin update from senior Kitco technical analyst Jim Wyckoff, who noted that
“BC bulls have gained some upside momentum early this week, but need to show
more power in order to break the price downtrend in place on the daily bar
chart.”
Wyckoff’s warning to bulls was prescient, but they failed to
follow through as seen by the move lower in the afternoon. As it stands now,
“bears still have the slight overall near-term technical advantage,” according
to Wyckoff.
Traders flee the sinking pound
Insight into the source of weakness across all financial markets, not just crypto, was provided by independent market analyst and pseudonymous Twitter user Crypto Tony, who posted the following tweet warning that “the Dollar has not quite topped out yet.”
And it is not just BTC that the strong dollar is affecting
as the value of the British pound plunged, with the GBP/USD pair hitting $1.03,
its lowest value on record. This, in turn, has sparked a wave of BTC buying by
holders of the pound looking to preserve their purchasing power.
According to data provided by James Butterfill, head of
research at CoinShares, trade volume for the GBP/BTC pair on exchanges Bitstamp
and Bitfinex, which usually see a combined total volume of $70 million per day,
surged to $881 million on Sept. 26 – an increase of over 1,150%.
It won’t be surprising to see a similar increase in buying activity by holders of other fiat currencies looking for alternatives but not interested in holding the dollar.
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