It has been a tough week for the cryptocurrency market, mainly due to the collapse of the Earth ecosystem and its ripple effect on Bitcoin prices (BTC), Ether (ETH) and the rest of the market.
The difficulties for the cryptocurrency market began in late 2021 as the US dollar gained strength and the US Federal Reserve hinted that it would soon raise interest rates.
According to a recent report from Delphi Digital, the 14-month RSI of the US Dollar Index (DXY) now has “exceeded 70 for the first time since 2014-2016.“
This is a considerable figure, given that in 11 of the 14 cases in which this has occurred previously “we saw the dollar strengthen over the next 12 months.“In other words, there is a good chance that the situation for risk assets will only get worse.
On average, the DXY rose about 5.7% after its RSI rose above 70: in other words, if we take the May 13 values as a basis, “this would take DXY to nearly 111, the highest level since 2002.“
Delphi Digital said:
“Assuming the correlation between DXY and BTC remains relatively strong, this would not be good news for the cryptocurrency market.”
This may be the best time to buy, says Pantera Capital CEO
Bitcoin is now again testing its 200-week exponential moving average (EMA), near $ 26,990: according to Delphi Digital, it has beentorically a key area for price lows“.
Bitcoin also continues to hold above its long-term weekly support range of $ 28,000 to $ 30,000, which has proven to be a solid support during the recent market turmoil.
Despite the period of panic, Pantera Capital CEO Dan Morehead, commented:
“The best time to buy is when the price is well below the trend. This is one of those moments. Bitcoin has been so cheap relative to its trend only 5% of the time from December 2010 to the present. If you own the right financial (and emotional) resources, I recommend going against the trend and investing. “
On the contrary, Delphi Digital urged caution, underlining that “the best opportunities on the market don’t last long: the price will remain stuck for a longer time [fra i 28.000 e i 30.000 dollari]the more likely a further decline is.“And if such a drop does indeed occur, continues Delphi Digital, the next support will be at $ 22,000-24,000:
“We are seeing the first signs of capitulation, but we can’t say for sure that Bitcoin has reached the bottom.”
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