A minor dip in the US dollar Thursday has improved the Bitcoin market’s intraday outlook.
The benchmark cryptocurrency surged by up to 1.99 percent during the early European session, hitting a session high at $10,420. It underwent a small downside correction later, falling back below $10,300 to underscore its sideways bias for the rest of the session.
Meanwhile, the US dollar index (Symbol: DXY), which pits the greenback against a basket of foreign currencies, plunged 0.20 percent to its intraday low at 93.04. The losses came as investors waited for the European Central Bank’s monetary policy meeting around noon.
The dollar was recovering after bouncing back from its two-year low level at 91.75 on September 1. Its gains appeared after better-than-expected manufacturing and jobs reports in the US. That prompted investors to anticipate a delayed government stimulus and slow liquidity injection from the Federal Reserve.
An appreciating greenback reduced bids for safe-haven assets. Bitcoin, an arguable hedging asset itself, plunged by up to 18.75 percent since the day DXY started recovering. The inverse correlation between the two markets was visible with naked eyes.
Konstantin Anissimov of CEX.IO, nevertheless, spotted some bearish cracks in the Bitcoin’s intraday rally. The executive director said in a note to clients that BTC/USD is forming a bearish pennant structure on its lower-timeframe charts. Such a pattern in a downtrend hints further continuation.
“This technical formation is quite pessimistic because it suggests Bitcoin could drop to $9,000 and Ethereum towards $250,” Mr. Anissimov told BlocDesk. “Such a bearish scenario would likely shake out even the most optimistic investors in the space.”
He, meanwhile, expected Bitcoin to hold its bullish bias as long the cryptocurrency maintains a price floor above $10,000.
Bitcoin held tight above the $10K level during the latest tech stock slump. The unflinching attitude borrowed fats from traders who still believe BTC/USD would log a significant bull run as long as interest rates remain lower and the US Federal Reserve keeps its foot on the money supply pedal.
Even Mr. Anissimov, with his bearish outlook, recognized the presence of “whales” that bought Bitcoin as it dropped below $10,000. Excerpts from his note:
“The number of stablecoins being transferred to exchanges has increased significantly as prices were falling while the number of addresses with at least $10,000 in USDT has been plummeting fast. This data suggests that BTC and ETH’s buying pressure has been increasing even though it has not been reflected in prices.”
BTC/USD was trading at $10,251 at the time of this writing, up 0.27 percent into the Thursday session.