Bitcoin is hovering around $20K. Bears do not allow the cryptocurrency to settle above the mark. A similar situation took place yesterday. Bulls attempted to consolidate above $20k, but the price went down.
Despite an unsuccessful retest of the level, the uptrend may resume and bullish activity may gradually increase.
Conditions for a possible bull run
The correlation with the US dollar index may well be the main driving force for BTC and the crypto market. DXY reached 114.5 before pulling back. The dollar index is still on the rise despite strong bearish pressure. In addition, technical indicators signal overheating.
Bitcoin and stock indices are inversely correlated with the US dollar index. When DXY goes up, risk assets go down, and vice versa. A correction in the dollar index is seen as the main signal for high-risk assets to resume an uptrend.
A similar situation happened in July-August 2022. Back then, bitcoin hit the swing high of $25k and SPX settled above $4,000. Given that DXY updated its 20-year high as well as excessive overheating, a correction could occur.
What's the catch?
According to Santiment data, bitcoin is firm at around $20k due to the increased activity of speculative investors. Highly leveraged positions and relative parity between long and short positions are forcing the market to hold onto the $20k barrier, where high liquidity is concentrated.
Meanwhile, an impending correction in DXY may trigger an uptrend in BTC. Santiment says that this may pose certain risks to the cryptocurrency. Many crypto investors are waiting for BTC to rise above $20k to lock in profits or sell it at a break-even price.
This could lead to a collapse in BTC quotes up to $18.5k. The price was able to test the $20k-$19.2k range within the two weeks of market swings. Still, when the uptrend starts, it is the pace of an increase in buy trading volumes that will be driving bitcoin.
Technical analysis for BTC/USD
Yesterday, BTC failed to settle above $20k. The price soared but then encountered resistance from high sell trading volumes. Eventually, the price tumbled to $20k, and a red candle with a long upper wick formed on the daily chart.
BTC/USD lacks growth potential. The RSI and Stochastic Oscillator are still moving down, indicating the power of bears. Still, it is important to remember that the price shows sharp rebounds during the current bearish trend.
Jerome Powell's yesterday statement could also trigger a bullish impulse. The chairman said that the regulator supports responsible innovation, including cryptocurrencies. If statements like that come more often, there could be more rebounds occurring.
Final thoughts
The first attempt of BTC to rebound means the uptrend could resume. DXY is still bullish, but its growth potential is limited. If a correction in DXY occurs, BTC could start an uptrend.
