On September 7, Bitcoin encountered a critical long-term trendline as the US dollar demonstrated its strongest performance in six months. BTC’s price gravitated around the $25,700 mark, showing a degree of stability compared to the previous day, which witnessed fluctuations between $26,000 and local lows below $25,400 within an hour.
BTC/USD 1-hour chart. Source: TradingView
Caution Prevails Among Bitcoin Participants
Market sentiment regarding Bitcoin remained cautious, with many anticipating further downside. Prominent trader TraderSZ expressed this sentiment, suggesting that unless Bitcoin reclaims its May low, he expects further downward movement.
“Taken a short here half size targeting 23.6k. If we reclaim May low I will look to scale out.”
#Bitcoin Open Interest ramping up yet again.
Looks to be setting up for another wick to take out some positions soon. Looks to mainly be shorts chasing price here at the last bit. pic.twitter.com/lr3VYtxu7F
— Daan Crypto Trades (@DaanCrypto) September 7, 2023
Key Level: 200-Week EMA
Michaël van de Poppe, CEO of trading firm Eight, emphasized the significance of the 200-week exponential moving average (EMA) at $25,670 as a pivotal level to monitor on weekly timeframes. The question on everyone’s mind, he noted, is whether Bitcoin will maintain its position above this crucial EMA.
BTC/USD annotated chart. Source: TraderSZ/X
Bearish Predictions and Altcoin Concerns
Trader and analyst Toni Ghinea made a more categorical prediction, envisioning Bitcoin’s decline to $25,000 and possibly lower. Ghinea also suggested that altcoins would follow suit with new lows. He asserted that the move downward is far from over and cautioned against overly relying on the ETF narrative, suggesting it’s used to manipulate the market.
US Dollar Strength and Its Impact on Crypto and Risk Assets
Beyond the cryptocurrency realm, the US dollar’s strength had broader implications for risk assets. The US dollar index (DXY), after surpassing May’s local highs, reached 105.15, marking its highest level since March 10.
$ES update. So combining dxy view, where btc and eth are at, and now this. Putting pieces together for now tells me further downside till proven otherwise https://t.co/oHYXhllzcp pic.twitter.com/87H7YhX98c
— TraderSZ (@trader1sz) September 7, 2023
Analysts expressed concerns that the US dollar’s rally would continue to exert pressure on risk assets, particularly those on the higher end of the risk spectrum, such as cryptocurrencies. This sentiment was echoed by trader Benjamin Cowen, who highlighted the potential drain on risk assets due to the strengthening US dollar.
U.S. dollar index (DXY) chart with moving averages. Source: Caleb Franzen/X
Caleb Franzen, senior analyst at Cubic Analytics, concurred, emphasizing the bullish nature of the US Dollar Index (DXY) and its potential bearish implications for financial assets, particularly US equities.
US Dollar Strengthens, Casting Shadow on Crypto and Risk Markets
As Bitcoin tests its crucial 200-week moving average, the surging US dollar raises concerns about the stability of risk assets, with both traders and analysts expressing caution and predicting further downside potential.