Crypto news: the strong dollar penalizes the price trend of Bitcoin

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Latest crypto news: a particularly strong dollar these days is significantly penalizing the price trend of Bitcoin. 

Investors and speculators, mainly concerned about the situation in the Middle East, are seeking refuge in the US currency probably because they believe they can make purchases at lower prices in the coming days. 

The boom of the dollar and news on the price of Bitcoin

The value of the Dollar Index today has risen to 106.4 points.

This is a level that has not been seen since the beginning of November 2023, when the war between Hamas and Israel had just broken out. 

It is worth noting that the peak of last year’s Dollar Index occurred in October, when it even reached 107 points. Therefore, the current level is only slightly below the peak of 2023, which is at a significantly high level for over a year now. 

In 2022, during a bear market, it rose to 114 points, but remained below 107 until July. Therefore, the current situation of the Dollar Index seems similar to that of June 2022, although it is not certain that it will continue to rise beyond 110 points as it did back then. 

Moreover, in July of last year, when the bear market was already behind us, the Dollar Index fell below 100 points, and in December, when the Hamas war in Israel was over, it dropped to 101. 

These are movements evidently connected to the geopolitical situation, probably precisely because many investors (and especially speculators) sell to cash in dollars when they think prices are about to fall, with the intention of using those dollars to buy back at lower prices.

The struggles of Bitcoin price

The price suffering of Bitcoin actually started on Friday. 

It is therefore likely that the markets had already started preparing for a correction, and that the events unfolding in the Middle East have only accelerated a movement that was already underway. 

Just on Friday the Dollar Index rose above 106 points for the first time since November 2023. 

This upward movement, however, had already started on Wednesday 10, when it suddenly jumped from 104 to 105.2. In fact, even the 105 level had not been seen since last November. 

The Friday rally of the US dollar triggered the correction of the Bitcoin price, initially dropping from $70,000 to $66,000.

66,000$ was a not particularly worrying figure, but on Saturday the attack on Israel by Iran caused fear to rise in the financial markets, and since traditional stock exchanges were closed, panic focused on the crypto markets. 

The minimum peak reached three days ago was actually below $61,000, but for now the price of Bitcoin has not yet dropped below $59,000. 

Following the news that the Iran attack had failed and ended, the price of BTC returned to $66,000. 

The problem is that yesterday, with the reopening of traditional markets, the Dollar Index started to rise again, and just as it went from 105.9 to 106.2 points in a few hours, the price of Bitcoin started to fall again. 

The first drop also brought it below $63,000, followed today by another one triggered by the further rise to 106.4 points of the Dollar Index. 

For now, however, after briefly dropping below $62,000, the price of Bitcoin has bounced back above $63,000, which is still significantly lower than the $66,000 it started yesterday’s session with. 

According to several analysts, the current correction could push the price of BTC below $60,000. 

The halving: about three days away from the event

During the night between Friday and Saturday, when block number 840,000 of the Bitcoin blockchain will be mined, the fourth halving in its history will occur. 

According to Bitfinex analysts, this could also have played a role in the ongoing decline. 

Indeed, in the latest Bitfinex Alpha report they write that the approaching halving has put the crypto markets at a crossroads, effectively forcing traders to focus on the imminent event.

The fact is that what happened over the weekend was the largest Bitcoin sell-off event in history over the course of two consecutive days. 

Bitfinex analysts point out how current market dynamics indicate that long-term holders have sold some of their BTC which have been absorbed by new short-term buyers.

In addition, BTC held on exchanges by long-term investors has dropped to the lowest levels in the last 18 months.

In particular, the approach of the halving would have caused a surge in Bitcoin withdrawals from exchanges, indicating anticipation for a potential price increase fueled by the reduction in supply.

The analysts at Bitfinex commented on this dynamic saying: 

“Fundamental for the dynamics of Bitcoin prices is this week’s halving, which as it approaches has seen a significant increase in BTC leaving centralized exchanges and a decrease in inactive BTC supply that has not moved for over a year, down to the lowest level in the last 18 months.”

This seems indicative of the fact that long-term holders (LTH) continue to reduce their holdings or move their assets off-exchange. There has certainly been an observable shift in the composition of the Bitcoin investor base, with new entrants (short-term holders, STH) absorbing the supply sold by LTH. This is highlighted by the increasing market value to realized value ratio for STH, although it is still below peak levels observed in previous cycles.

If this dynamic of STH absorbing the discounts of LTH persists, it could indicate room for further price growth.”