December 6, 2022

Bitcoin Tumbles As The U.S Dollar Strengthens

The fear-trade reemerged across global financial markets on Friday. This happened as the most recent jobs report out of the U.S. showed decline in unemployment amid tight labor conditions. Consequently, this has signaled to the market that the Fed will continue its aggressive rate hikes, affecting Bitcoin.

The U.S Economy Vs Bitcoin

The U.S. economy added 263,000 jobs last month after an expected payroll gain of 255,000. At the same time, the unemployment rate fell to 3.5%, coming in lower than the expected 3.7%. The response was immediate as asset prices across the markets plunged into the red. Investors were looking to capture what value they could ahead of expected declines.

Furthermore, the US dollar resumed its climb higher, with the DXY knocking on the door of 113.00. This puts it within striking distance of the recent multi-decade high of 114.78 that was established on Sept. 28.

Data from TradingView shows that Bitcoin (BTC) was oscillating around support at $20,000 prior to the jobs report. However, it plunged to a daily low of $19,336 within hours of the report’s release. At the time of writing, bulls managed to bid its price back up to $19,530.

Bitcoin Bears Again?

Friday’s pullback has given bears a slight advantage, according to Kitco senior technical analyst Jim Wyckoff. He suggested that “Bears have gained just a slight bit of momentum late this week,” in his morning Bitcoin update.

Still, bulls and bears continue to fight for near-term technical control, with neither gaining much ground and still on a level overall near-term technical playing field,” Wyckoff said. “That suggests more sideways and choppy trading in the near term.”

Sideways price action is a hallmark of crypto winters.

Furthermore, for all the volatility and fuss that the crypto market has experienced over the past two months, Bitcoin has largely traded sideways near its 200-week moving average (MA), which has historically been a good buying opportunity.

That being said, many analysts in the market have taken a more bearish perspective following recent developments. 

This includes pseudonymous crypto analyst Il Capo of Crypto. He posted a tweet outlining a possible pump and dump in the BTC price in the near future.

Furthermore, it remains to be seen how Bitcoin performs moving forward. The top crypto has defied analysts’ calls for a $15,000 price for months now. And there’s a good chance that it will continue to hold support in the $18,000- $20,000 range.

In addition, some traders prefer to focus on the long-term. They do this as a way to avoid the stress brought about by the volatility that crypto is known for. Rekt Capital provides insight as to how history views buying BTC at these prices.

Altcoins

The strengthening dollar spared few in trading on Friday, be they cryptocurrencies or traditional assets.

At the close of the markets, the S&P, Dow and Nasdaq were all deep in the red. They were down 2.73%, 2.04% and 3.8%, respectively.

It was a similar story in the altcoin market. With only a handful of tokens in the top, there were 200 posting positive gains for the day.

The notable exceptions include a 13.5% increase for Hive (HIVE), a 6.43% gain for 1inch Network (1INCH), and a 5.96% increase for Injective (INJ).

The overall cryptocurrency market cap now stands at $944 billion, and Bitcoin’s dominance rate is 39.6%.

Augustine Ojeh

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