Latest crypto news: a particularly strong dollar in recent days is clearly penalizing the price trend of Bitcoin.
Investors and speculators, worried above all about the situation in the Middle East, are taking refuge in the US currency probably because they are convinced that they will be able to make purchases at lower prices in the coming days.
The dollar boom and news on the price of Bitcoin
The value of the Dollar Index today rose 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 recently broken out.
It should be noted that the maximum peak of the Dollar Index last year occurred in October, when it also reached 107 points. So the current share is only slightly below the maximum peak of 2023, i.e. at a decidedly very high level for more than a year now.
In 2022, in the midst of the bear market, it rose to 114 points, but until July it remained below 107. So the current situation of the Dollar Index seems similar to that of June 2022, even if it is not certain that it will continue to rise beyond the 110 points as he did then.
Furthermore, in July last year, when the bear market was behind us, the Dollar Index fell below 100 points, and in December, when the Hamas war on Israel was now over, it fell to 101.
These are therefore movements evidently connected to the geopolitical situation, probably precisely due to the fact that many investors (and especially speculators) sell to collect dollars when they think that prices are about to fall, with the intention of using those dollars to buy back for precisely at lower prices.
The suffering of the price of Bitcoin
The suffering of the price of Bitcoin had actually started already on Friday.
It is therefore likely that the markets had already begun to prepare for a correction, and that the worsening of events in the Middle East only accelerated a movement 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 begun on Wednesday the 10th, when it suddenly jumped from 104 to 105.2. In fact, even 105 hasn’t been seen since last November.
Friday’s rise in the US dollar triggered a correction in the price of Bitcoin, which initially fell from $70,000 to $66,000.
$66,000 was not a particularly worrying level, but on Saturday the attack on Israel by Iran sent fear into the financial markets, and since traditional stock exchanges were closed, the panic was concentrated in the crypto markets.
The minimum peak reached three days ago was even lower than $61,000, but for now the price of Bitcoin has not yet fallen below $59,000.
Later, as news spread that Iran’s attack had failed and ended, the price of BTC returned to $66,000.
The problem is that yesterday, with the reopening of the traditional stock exchanges, the Dollar Index began to rise again, and just as it went from 105.9 to 106.2 points in a few hours, the price of Bitcoin began to fall again.
The first descent also took it below $63,000, followed today by another resulting from a further rise to 106.4 points of the Dollar Index.
For now however, after returning for a brief moment even below $62,000, the price of Bitcoin has rebounded above $63,000, which however is a figure significantly lower than the $66,000 with which it began yesterday’s session.
According to several analysts, the current correction could push the price of BTC even below $60,000.
The halving: approximately three days from the event
On 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 take place.
According to Bitfinex analysts, this may also have played a role in the ongoing decline.
In fact, in the latest Bitfinex Alpha report they write that the approaching halving has put the crypto markets at a crossroads, effectively forcing traders to turn their attention to the imminent event.
The fact is that what happened over the weekend was the largest liquidation event in Bitcoin history that occurred over two consecutive days.
Bitfinex analysts highlight how current market dynamics indicate that long-term holders have sold some of their BTC which has been absorbed by new short-term buyers.
Additionally, BTC held on exchanges by long-term investors fell to the lowest levels in 18 months.
In particular, the approaching halving would have caused a surge in Bitcoin withdrawals from exchanges, indicating the expectation of potential price growth fueled by the reduction in supply.
Bitfinex analysts commented on this dynamic by saying:
“Crucial to Bitcoin’s price dynamics is this week’s halving, which as it approaches has seen a notable increase in BTC leaving centralized exchanges and a decrease in the inactive supply of BTC which has not moved in over a year, to the lowest level of the last 18 months.
This seems indicative of long-term (LTH) holders continuing to reduce their holdings or move their assets off-exchange. There has certainly been an observable change in the composition of the Bitcoin investor base, with new entrants (short-term holders, STHs) absorbing the supply sold by LTHs. This is evidenced by the growing market value to realized value ratio for STHs, although it is still below the peak levels seen in previous cycles.
If this dynamic of STH absorbing LTH sell-offs persists, it could indicate room for further price growth.”
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