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Bitcoin Weekly Outlook: Is BTC/USD About To Surge Higher?

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Bitcoin was able to pare a significant portion of the losses it incurred last week due to a strengthening dollar sentiment. And now, the benchmark cryptocurrency is looking to continue its upside momentum based on a favorable fundamental outlook in the new week.

BTC/USD was up 1.05 percent to $10,891 during the early morning trading session on Monday. Its latest uptick appeared as buyers tried to slow down in the US dollar market. A trade through 94.74–the US dollar index’s (DXY) local top–seemed unlikely as traders assessed the resumption of coronavirus stimulus package talks this week.

DXY corrects lower after testing resistance at 94.74-level. Source: TradingView.com

US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi indicated that they will resume negotiations over the long-delayed aid. The package, which may scale up to $2.4 trillion, will benefit millions of American households and individuals who qualify.

“I am hoping for a deal,” Pelosi told CNN on Sunday. “I’d rather have a deal to put money in people’s pockets than to have a rhetorical argument.”

“I’ve probably spoken to Speaker Pelosi 15 or 20 times in the last few days … and we’ve agreed to continue to have discussions about the CARES Act,” Mnuchin said Thursday.

The next expects to be ready for a vote on October 2 – this Friday.

Stimulus-Led Pump

Bitcoin reacted positively to the series of events. The cryptocurrency jumped 4.93 percent–from $10,237 to $10,795–on Thursday. It continued correcting higher after Mnuchin’s comments, with Pelosi’s comments on Sunday further fueling the bullish sentiment for the new week.

The upside moves took place because of a popular narrative.

Bitcoin bulls believe that a humongous supply of the US dollar, coupled with ultralow interest rates, increases the appeal of safe-haven assets in the long-term. The belief was overly visible after the March 2020 crash, wherein BTC/USD rose by more than 200 percent against the US Congress’s first stimulus package.

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Bitcoin stays on its March 2020 uptrend despite the latest corrections. Source: TradingView.com

“The DXY is always going to have a relationship with BTC, as it does in any currency pair,” said Cantering Clark, an independent market analyst. “It’s the Denominator, or “Counter currency”. Bitcoin is the “Base currency.” If you are long BTC, you are essentially short the dollar.”

Bitcoin Technical Outlook

BTC/USD appeared to have been bouncing off a short-term support level. It has served as the lower trendline of a consolidation channel–a Symmetrical Triangle–as shown in the chart below.

bitcoin, btcusd, btcusdt, xbtusd, cryptocurrency, Euro, EURUSD, cryptocurrency, dollar, dxy, s&p 500, dow jones, nasdaq, gold

Bitcoin price technical setup as per the Symmetrical Triangle pattern. Source: TradingView.com

The supportive fundamentals until Friday could help Bitcoin moving towards the upper trendline. That would mean a clear break above the 50-day moving average, followed by a close towards $11,500. In the event of a passed stimulus bill, the rally may continue further higher into the weekend to top near $12,000.

Nevertheless, a failed bill would risk negating Bitcoin’s gains, leading it back towards the lower trendline. Thereon, the cryptocurrency may move further lower towards the 200-day moving average at below $9,000.





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3 reasons why Bitcoin price has not been able to rally back above $40K

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The ongoing story for the past couple of months in the cryptocurrency market has been confusion on whether Bitcoin (BTC) is destined for another leg down or is finally ready to break out toward new highs.

Bitcoin’s price history and data from previous corrections suggest that the current struggles for the top cryptocurrency could persist for a little bit longer due to the strengthening dollar, the possibility of decreasing economic stimulus and a slew of technical factors connected to Bitcoin’s price action.

A strong dollar threatens Bitcoin’s recovery

According to data from Delphi Digital, one of the biggest factors placing strain on risk assets around the globe is the strengthening U.S. dollar which appears to be attempting a trend reversal after falling below 90 in late May.

DXY 1-day chart. Source: TradingView

Rising dollar strength put a halt to the year-long uptrend in the 10-year US Treasury yield which is also a reflection that the economic expansions seen in the first half of 2021 are beginning to lose steam and there is a threat that a new wave of Covid-19 infections threatening the global economic recovery.

Fractals and the Death Cross suggest the correction is not over yet

The short-term outlook for Bitcoin remains bearish as previous instances of the “Death Cross,” which appeared on BTC’s chart in late June, have been followed by a corrective period that can last for nearly a year.

Bearish crossover of the 50 day and 200-day MA. Source: Delphi Digital

According to the analysts at Delphi Digital, the 12-month moving average is being tested as support, and a dip below this level would signal further downside for BTC price.

Bitcoin price testing the12-month moving average. Source: Delphi Digital

The 12-month moving average has been a key support level for Bitcoin historically, so how the price performs near this level could dictate whether the current uptrend remains intact.

Related: El Salvadorians take to the streets to protest Bitcoin law

Overall, caution is warranted for traders because low volumes have historically led to higher volatility when fewer open bids can lead to rapid price fluctuations.

As explained by Kevin Kelly, a certified financial analyst at Delphi Digital, “the short-term outlook turns quite a bit more bearish if and when we break those key levels” near $30,000.

Kelly said:

“I don’t necessarily think that we will see as nearly as significant of a drawdown as we did in say, post-December 2017, early 2018, and into the end of that year. But I do think, just given the structure of the market, that we could potentially be in for a bit more short-term volatility and potentially some more headwinds here, in the near term.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.