Bitcoin made a failed attempt to retest the level of $25k and then started to decline towards $24k and below. Later, the price hit the level of $23,7k where buyers finally stepped in and stopped the BTC/USD quote from a further decline. Then, Bitcoin resumed the upward movement and recovered above the level of $24k. Yesterday, BTC closed the session below this mark which was a negative signal. A short rebound above $24k does not change the situation on a larger scale. An unsuccessful rally to $25k supported the bearish bias, and there are several reasons for this.
The main reason why BTC is losing its shine among investors is the data on US inflation. The figures showed a decline to 8.5% from 9.1% which is definitely a positive dynamic. This news has a positive influence on all major markets as it may signal a change in the Fed's future monetary policy. The US dollar and the related index benefited the most from this news. DXY completed its corrective movement that had been going on for more than a month. The asset has formed two proper green candlesticks for the first time since early July.
From the technical point of view, the index is now in the final stage of a correction. The RSI is turning upwards, thus signaling that bullish activity is picking up. The Stochastic Oscillator Indicator is completing the bullish crossing formed near the oversold zone. At the same time, the MACD indicator is about to form a bullish crossing although it is still holding in the red zone. Technical signals indicate that DXY is preparing to resume an upside movement. This means that capital flow into Bitcoin and other risk assets will notably decrease.
At the same time, Bitcoin still maintains a strong upside potential that correlates with stock indices. The S&P 500 index continues to advance despite the end of a correction in DXY. The S&P 500 has firmly settled above $4,200 and is now approaching the key support zone near $4,400. This is where the price is likely to reverse and start a correction. The RSI that has reached the oversold zone above the mark of 80 confirms this idea. The Stochastic Oscillator has completed the formation of the bearish crossing, signaling some downside potential. Importantly, SPX began to rise on July 15, just when DXY initiated its corrective movement.
As we assumed a month ago, stock indices and BTC will use every reason for growth. A correction in DXY became the main catalyst for their uptrend. Besides, a positive news background pushed the quotes to new highs. Yet, we should be ready to see a decline soon as investors will mostly focus on assets related to the US dollar. This view is supported by the main prophet of the 2008 crisis, Michael Burry. The entrepreneur sold 98% of his shares in the investment portfolio as he predicted the crash of the stock market.
As for Bitcoin, we can clearly see that the price is declining and forming a triangle pattern. A sharp bullish rebound from the local support of $23.7k is in line with the formation of the pattern. The RSI and the Stochastic Oscillator made a sharp bullish reversal, but this is unlikely to change anything. BTC/USD quotes are completing the formation of a triangle. Therefore, we should expect increased volatility in the market and may soon see the price leaving the range. Given extremely low trading volumes, the pressure from miners, and the lack of support from the fundamental background, the price of Bitcoin is more likely to go down in the near future.
