Bitcoin rejects $40K as US dollar strength hits 20-year high

Bitcoin (BTC) made a fresh bid to break through $40,000 on April 28 as it opened Wall Street’s trading to a twenty-year high on the strength of the US dollar.

BTC/USD 1-hour candlestick chart (Bitstamp). Source: TradingView

DXY is now at “elevation parabolic”

Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD reached $39,883 on Bitstamp before momentum waned, sending the pair down $800 after hours.

Traders had anticipated what they saw as a comfortable bounce, which implies that the subsequent rejection will lead to a continuation of the downtrend.

On the day, caution was advised.

“BTC is currently consolidating in this falling wedge. In case of a breakout, I will target $42,000. Good to wait for confirmation first if you decide to take the trade, IMO,” popular Twitter account Daan Crypto Trades argue.

“Just a strong break and a $40.6k recovery will make me look higher,” fellow Crypto trader Ed added.

“Charts: mostly pointing lower. Liquidity: pressure to the upside to hunt short positions.”

However, with limited movement on Bitcoin itself, the focus was entirely on the dollar, which continued to outperform itself as the US Dollar Currency Index (DXY) reached its highest levels since 2002.

US Dollar Index (DXY) candlestick chart. Source: TradingView

“The parabolic rally by DXY does not bode well for risky assets like stocks and bitcoin. Until the rally subsides, playing on defense is the way to go,” commentator Benjamin Coen said. warned.

Others agreed that DXY is now “equivalent,” while trading expert Blockchain Backer saw parallels between the current setup of the dollar against other currencies and the period immediately following the COVID-19 crash across assets in March 2020.

The theory is that a US dollar reversal would give Bitcoin some relief. anticipation To do “really well” in such circumstances.

Analyst: The US dollar will collapse in light of the upcoming “major currency crisis”

Meanwhile, the outbreak of the US dollar raised concerns about spillover effects to other economies.

Related Topics: Ex-BitMEX CEO Explains How Bitcoin Will Reach $1 Million by 2030

If instability enters the picture, volatility may return to haunt risky assets already at the mercy of the central bank’s anti-inflation policy. Ironically, the spark could be Japan, as the central bank continues to print money.

“No matter which way Yen goes from here, chaos follows,” said Brent Johnson, CEO of Santiago Capital. expect On April 27.

“If capital flows back to Japan and back to the support line, it would be a huge draw for money for the rest of the world. If the dive continues, it puts pressure on the People’s Bank of China to allow the yuan to fall as well. Neither of these two options are good…”

The Japanese Yen is also trading today at its lowest level in twenty years.

“What do Keynesian investors do in a crisis? They rush into the dollar thinking it is safe,” said Alasdair MacLeod, head of research at precious metals trading firm Goldmoney, added.

“Almost all investors and money managers have been brainwashed into thinking this way since the Nixon shock. The yen’s decline accelerated this morning.”

MacLeod saw what he called a “major currency crisis” coming, swallowing up the “next” dollar’s strength as it followed the fate of the yen, euro and pound.

JPY/USD 1-month candle chart. Source: TradingView

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