It has been a tough week for the cryptocurrency market, primarily due to the Terra ecosystem collapse and its knock-on impact on Bitcoin (BTC), Ethereum (ETH) and altcoin costs, plus the panic promoting that happened after stablecoins misplaced their peg to the U.S. greenback.

The bearish headwinds for the crypto market have been constructing since late 2021 because the U.S. greenback gained power and the USA Federal Reserve hinted that it will elevate rates of interest all year long.

In line with a latest report from Delphi Digital, the 14-month RSI for the DXY has now “crossed above 70 for the primary time since its late 2014 to 2016 run up.”

DXY index efficiency. Supply: Delphi Digital

That is notable as a result of 11 out of the 14 cases the place this beforehand occurred “led to a stronger greenback ~78% of the time over the next 12 months,” which factors to the chance that the ache for property might worsen.

On common, the DXY gained roughly 5.7% after its RSI rose above 70, which from Could 13’s studying “would put the DXY Index simply shy of 111, its highest stage since 2002.”

BTC/USD vs. DXY Index (inverted) and a rolling 60-day correlation. Supply: Delphi Digital

Delphi Digital stated,

“Assuming the correlation between the DXY and BTC stays comparatively robust, this is able to not be welcoming information for the crypto market.”

Bitcoin is at a key space for value bottoms

Taking an even bigger image strategy, BTC is now retesting its 200-week exponential transferring common (EMA) close to $26,990, which has “traditionally served as a key space for value bottoms” in line with Delphi Digital.

BTC/USD vs. 200-week EMA vs. 14-week RSI. Supply: Delphi Digital

Bitcoin can be persevering with to carry above its long-term weekly assist vary of $28,000 to $30,000, which has confirmed to be a powerful space of assist all through the latest market turmoil.

Whereas many merchants have been panic promoting in latest days, Pantera Capital CEO Dan Morehead has taken a contrarian strategy, noting, “It’s finest to purchase when [the] value is nicely under pattern. Now could be a type of instances.”

Bitcoin fund inflows relative to cost pattern. Supply: Twitter

Morehead stated,

“Bitcoin has been this “low cost” or cheaper relative to pattern solely 5% of time since Dec 2010. When you’ve got the emotional and monetary assets, go the opposite method.”

A phrase of warning was supplied by Delphi Digital, nevertheless, which famous that “one of the best alternatives or “offers” available in the market will not be round for lengthy.”

Since BTC has been buying and selling within the $28,000 to $30,000 vary for an prolonged time period, “the longer we see value construct in these areas, additional continuation turns into extra possible.”

If additional decline happens, the “weekly construction and quantity construction assist at $22,000 to $24,000” and the “2017 all-time excessive retests of $19,000 to $24,000” are the subsequent main areas of assist.

Delphi Digital stated,

“Early indicators of capitulation are beginning to bleed by means of, however we will’t say we’re nearing the purpose of max ache simply but.”

The views and opinions expressed listed here are solely these of the creator and don’t essentially replicate the views of Each funding and buying and selling transfer entails threat, you must conduct your personal analysis when making a call.