According to the classic technical setup called Rising Wedge, the U.S. dollar Index (DXY), could continue its slide during Q4. BTC’s (BTC’s) bearish prospects could push Bitcoin’s (USD) price to new highs, as it currently holds $62,000.
DXY to suffer another 1.75% decline
Rising Wedges, which are bearish reversal patterns, begin at the bottom and contract as the price rises. The rally becomes less convincing as the trading range narrows. This causes the price to fall below the Wedge support line, and then falls as far as the maximum distance between pattern’s trendlines.
Since August 2021, DXY has formed a similar price structure. The index’s fall this week saw it breach the Wedge support line. This triggered a bearish setup towards 92.416. It is now down around 1.75% from the breakout level (93.98).
DXY daily price charts featuring rising wedge setup. Source: TradingView
DXY reached a record 94.563 a week ago. This was due to stagflation fears, the Federal Reserve’s decision in November 2021 to end its $120 billion per month asset purchase program, and then interest rate increases next year.
The index fell to its lowest level in three weeks on Tuesday, indicating that the money markets have already priced in the Fed’s tapering decision. Instead, they have shifted their attention to policy normalization elsewhere. Analysts for the United Kingdom predict that rate hikes of 35 basis points will be achieved by the end.
Bitcoin rallying on ETF FOMO
The weaker dollar and optimism over the debut of an exchange-traded fund (ETF), tied to Bitcoin Futures on New York Stock Exchange helped Bitcoin prices this week.
BTC/USD rose by more than 40% month-to date to reach a five-month high Tuesday of $62,987. Bitcoin maintained $62,000 interim support to a weakening dollar sentiment despite a minor correction.
BTC/USD daily chart with ascending channel pattern. Source: TradingView
Technically, Bitcoin has reached the bullish exhaustion point of its ascending channel range. The cryptocurrency’s relative strength index (RSI), which was also above 70 on a daily basis, could see an interim correction in price with a support target of $60,000.
However, many analysts predict that Bitcoin will reach $100,000 in the long-term.
Fundstrat Global Advisors co-founder Tom Lee stated Monday in a note that ETFs that are based on Bitcoin Futures will attract more than $50 Billion in inflows over the first year. He also suggested that BTC could rise to $168,000 as a response.
Related: Bitcoin price up 50% after China banned Bitcoin mining
Jurrien Timmer is the director of global macro for Fidelity Investments. He noted that Bitcoin would be a six-figure asset in 2023. Metcalfe’s law measures a network’s value based upon its growth rate.
Timmer said that other technology innovations and even stocks like Apple, not that I am a security analyst, have gone through the same process. Apple’s sales increase 38-fold over 10, 20, and 900 years and its market value increases by 900 percent.” Timmer added:
It’s an exponential growth. Based on these metrics, my models predict that by 2023, they will have $100,000. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
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