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- Bitcoin breaks horizontal resistance at the $32k space
- The rally extended above $35k
- Bulls must be frightened as a result of Bitcoin diverges from the US greenback
Bitcoin buyers are thrilled to see the cryptocurrency leaping to a brand new excessive for the 12 months. More exactly, Bitcoin traded above $35k for the first time in over a 12 months.
It did so by tripping stops seen in the $32k space. This space supplied resistance for fairly a while, and Bitcoin lastly broke above.
That is the excellent news for bulls.
The dangerous information is that in doing so, Bitcoin diverges with the remainder of the fiat currencies. More exactly, whereas Bitcoin gained in opposition to the US greenback, the buck rallied in opposition to its friends.
It might or will not be one thing to fret about. But if I have been an investor in Bitcoin (which I’m not), I’d fear. Here is why.
Bitcoin and the US greenback have diverged since Q1 2023
The downside for Bitcoin is that the greenback strengthened since Q1 2023 in opposition to its friends. Two examples are the EUR/USD and AUD/USD trade charges, which peaked in the 12 months’s first quarter.
EUR/USD, as an example, peaked at 1.12 and now trades round 1.06. AUD/USD erased virtually all its good points from the lows in October 2022.
Bitcoin is the final one standing in opposition to the greenback. While bulls might say that it’s only regular as a result of Bitcoin just isn’t correlated with macro dangers and positioning, I urge to vary.
Since Bitcoin is a part of many institutional portfolios, it does react to macro. Therefore, the rally we see right here would probably be reversed except the US greenback power dissipates. Only if the greenback begins weakening it is sensible to cheer for a Bitcoin rally.
Until then, warning is required.
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