Bitcoin’s (BTC) price has been showing some slight strength in the previous week as BTC rallied from $10,000 to $11,200. However, the crypto market’s overall consensus has been showing weakness with double-digit selloffs for many of the smaller-cap cryptocurrencies.
This selloff appears to have taken hold as Bitcoin price confirmed $11,200 as resistance in the previous weekend.
Rejection as $11,200 leads to a downward spiral
BTC/USD 1-day chart. Source: TradingView
In the previous analysis, the $11,000-$11,200 level was identified as a substantial resistance area to break. The significance of this level is very high as the previous consolidation period used the zone as a key area of support.
If the market wants to continue its upward momentum, this zone should be reclaimed as support, making a retest of $12,000 possible.
But since that rejection, the price of Bitcoin made a new lower high, which means further downward momentum is likely in the near term.
All markets are retracing, except the DXY
While the commodity, crypto, and equity markets have been breaking down, the U.S. Dollar Currency Index (DXY) has been showing strength.
DXY Index 1-day chart. Source: TradingView
All over the world, fears of new coronavirus lockdowns are increasing due to rising infection rates. In times of uncertainty, investors are looking for “safe” places, making the U.S. Dollar the most preferred place to park value when it comes to cash.
During the crisis of 2000 and 2008, and even the recent market crash in March, the U.S. Dollar was seen as the strongest asset.
The chart above shows a clear support/resistance flip of the 92.75 points level, after which a bullish divergence was confirmed. It seems likely that continuation toward 95 points is on the horizon unless a rejection occurs in the 93.50-94 range. The downtrend may resume continue if DXY rejects and loses the 92.75 area.
If DXY continues to show strength, commodity and crypto-assets will continue to misbehave. The inverse should be expected if DXY shows weakness.
Crypto total market cap embraces the $250-$275 billion zone
Total market capitalization crypto 1-week chart. Source: TradingView
The total market capitalization of crypto is still consolidating and correcting from the previous impulse wave. This means a crucial area to hold is the 100-week and 200-week moving averages (MAs), as these indicate the continuation of the bull and bear cycles.
However, the previous resistance and consolidation area between $250-$275 billion never had a test to confirm the breakout.
In that regard, the green area between $250-$275 billion is a very likely area of higher time frame support to be hit.
What’s next for Bitcoin’s price?
BTC/USDT 2-hour chart. Source: TradingView
The 2-hour chart shows a clear rejection at the $11,100-$11,300 area as the negative expectations of a breakout were met.
However, what’s next after such a strong crash in the markets? The $10,200-$10,325 area is a lower time frame support zone and indicators suggest that a relief bounce could be on the tables.
The crucial resistance zone to test and break for a bullish continuation is the $10,700-$10,750 area, which is also unlikely to expect at this time.
If this zone fails to break or the price loses the $10,200 area, investors’ attention will shift back to the untested level around $9,500-$9,700.
This level is still very significant as it is near the open CME gap.
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Bitcoin price failure at $11K moves focus back to sub-$10K CME gap