Bitcoin price nears 200-week trendline amid 6-month high for US dollar.

Bitcoin price nears 200-week trendline amid 6-month high for US dollar.

The Million Dollar Question: Bitcoin and the Battle of the Moving Average

Bitcoin (BTC) faced a crucial test on September 7th as it hovered near a key long-term trendline while the U.S. dollar strengthened to its highest point in six months. This convergence of factors left market participants wondering whether Bitcoin would hold above the 200-week exponential moving average (EMA) at $25,670, forming what some called the “million-dollar question.”

Throughout the day, BTC price movements revolved around the $25,700 range, exhibiting relatively less volatility compared to the previous day’s swings between $26,000 and lows below $25,400 within a single hour. However, traders remained cautious, with many predicting further downside for Bitcoin.

One trader, TraderSZ, expressed their belief that Bitcoin would continue to decline unless it reclaimed its May low. They took a short position and set a target of $23,600. Similarly, Michaël van de Poppe, founder and CEO of Eight, emphasized the significance of the 200-week EMA as the key level to watch on weekly timeframes. The question of whether Bitcoin could hold above this moving average remained crucial for the market’s future direction.

Another trader, Toni Ghinea, expressed a more definitive view, predicting Bitcoin to drop to $25,000 and potentially even lower. Ghinea also anticipated new lows for altcoins, suggesting that the ongoing battle to launch the first Bitcoin spot price exchange-traded fund (ETF) in the United States was merely a narrative used to manipulate the market. Despite the negative outlook, Ghinea concluded that there would be a time to buy in the future.

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These forecasts of a potential Bitcoin decline coincided with the strength of the U.S. dollar, which presented concerns for risk assets across various markets. The U.S. dollar index (DXY) surged to 105.15, its highest level since March 10th, after breaking through previous local highs from late May.

Analysts like Benjamin Cowen highlighted the negative impact of the dollar rally on risk assets, particularly cryptocurrencies. Cowen remarked that the U.S. dollar’s strength would continue to act as a drain on risk assets, with cryptocurrencies among the assets most affected. Another trader, TraderSZ, concurred with this view, forecasting downside for U.S. equities due to the strength of the U.S. dollar index.

Caleb Franzen, a senior analyst at Cubic Analytics, also noted the bullish price action of the U.S. dollar index, which indicated bearishness for financial assets. Franzen highlighted the breakout above the 200-day moving average cloud and the trendline from 2022 highs. According to Franzen, these developments were significant and indicated that support had flipped to the upside for the U.S. dollar index.

In summary, Bitcoin’s future direction remained uncertain as it tested the key 200-week EMA on the back of a strengthening U.S. dollar. Traders and analysts had mixed views, with some predicting further downside for Bitcoin and altcoins, while others emphasized the bullishness of the U.S. dollar index. The convergence of these factors left the cryptocurrency market on edge, eagerly awaiting the resolution of the “million-dollar question” surrounding Bitcoin’s position relative to the moving average.

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