Yesterday, the price of Bitcoin started to rise: at first, it seemed to be just a rebound, but there appears to be something more.
The decline of BTC
Everything begins on Tuesday.
Three days ago the prezzo di Bitcoin was about $107,000, but starting from Tuesday it began to fall.
There seemed to be no specific reason for that decline, except that the stellar performances of the US stock markets were draining capital from the crypto markets.
In fact, starting from Monday, the main indices of the US stock exchanges began to move towards new highs, already reached on Monday.
On Tuesday, there was a very slight decline in the US stock markets, probably due to the fact that the day before new all-time highs had been reached, and these two events triggered a drop in the price of Bitcoin.
Therefore, from Monday to last night there was a decline in the price of BTC from about $107,000 to about $105,000.
The rebound of Bitcoin price: cause and dynamics
In fact, however, that was an anomaly, because with the Dollar Index (DXY) falling, both the American stock market, which is risk-on, and the price of gold, which is risk-off, were rising, while Bitcoin, which is risk-on, was not rising.
Yesterday, this anomaly then dissipated, probably also due to the fact that a new positive session of the USA stock markets, with new all-time highs for S&P500, halted the rise of gold.
Comparing the charts, it is clear that on Monday and Tuesday the price of BTC was falling just as the price of gold was rising. The really strange thing is that gold was rising while the US stock markets were also rising, given that the former is a risk-off asset while the latter are risk-on.
As soon as that anomaly dissipated, gold stopped rising, and at that point, along with the US stock markets, Bitcoin also started to rise again.
It was therefore a true technical rebound, not due to deep factors but to the normal behavior of the market when the anomaly ended.
The rise of the Bitcoin price
Today is simply continuing the rise that started yesterday.
However, if yesterday’s was a simple rebound, with a trivial return to $107,000, today’s can no longer be considered as such.
In fact, the price of BTC has exceeded $110,000, returning to levels not seen since June 16.
Furthermore, it should not be forgotten that on June 22 it even made a dip below $99,000, therefore it could also be stated that there was a small correction from June 11 to 22, with the price dropping from $110,000 to less than $100,000, and then a long rebound that should still be ongoing.
The really interesting thing, however, is that the current price level is only at -2% compared to the all-time highs, recorded in May just below $112,000, and it is possible that the current trend is heading right there.
The reasons for the BTC rally
To explain these movements, it is necessary to distinguish medium-term movements from those in the short term.
The main driver of medium-term movements is the decline of the Dollar Index. It should be noted that in the medium term, the price trend of Bitcoin tends to be inversely correlated to that of DXY.
To tell the truth, the downward trend of the Dollar Index actually started back in January, but from mid-April to mid-June it seemed to have come to a halt.
However, starting from Monday, June 23, the Dollar Index began to decline again, dropping from almost 99 points to less than 97 in a week and a half. This may seem like a minor movement, but in reality, it is not at all, considering that generally DXY does not move that much.
This decline has not coincidentally coincided with the long rebound of Bitcoin mentioned above, even though in the short term other, opposite dynamics have been added.
The prevailing short-term dynamic in recent days has been the one already mentioned before, namely a capital drain from the US stock exchanges to the crypto markets, thanks to the new all-time highs of the US stock indices. This dynamic is the basis of the mini-correction at the beginning of the week and ended yesterday, thus reopening the path to the medium-term trend.
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Now the question is: how long will the decline of the Dollar Index last?
In reality, it might already be over, because just yesterday it touched the minimum level of the ascending channel that has lasted since 2008, and then it immediately bounced back.
However, if in the short term the decline of DXY, which began on Monday, June 23, might have halted, the medium-term descending channel that started in January still seems to be absolutely in place.
It could therefore take a break, and after a while start to fall again, perhaps even breaking down the minimum level of the long-term ascending channel that has been holding for 17 years. It is possible that all this happens in autumn, although it is not certain that the price of Bitcoin will rise immediately as a result.
