- Bitcoin’s forecasted sell signal has yielded a 7.21% correction so far.
- The fast-approaching halving could also add credence to the ongoing downtrend in BTC.
- From a macroeconomic perspective, the US Dollar Index shows that it has not done climbing higher.
The US Dollar’s strength is one of the reasons why Bitcoin (BTC) is showing weakness. A spike in buying pressure for the Greeback suggests that the market is risk-off, which could result in a negative impact on risky assets like stocks or cryptocurrencies such as Bitcoin.
Also read: Is Bitcoin’s recent upswing recovery rally or dead cat bounce?
Why Bitcoin’s correction is likely
Bitcoin’s momentum has remained relatively on the lower side for more than three weeks. With the start of a new week, BTC has already washed off the gains registered in the prior one. As mentioned in previous publications, the pioneer crypto has several reasons for not running higher:
- The lack of buying pressure and inability to produce a weekly candlestick close above the previous all-time high of $69,138.
- The MRI indicator has flashed a sell signal, forecasting one to four weekly down candlesticks for BTC.
- The rising strength in the US Dollar Index (DXY) is also one of the reasons why crypto markets are noting a slowdown.
- Furthermore, the fourth Bitcoin halving, set to occur around April 20, could be triggering a premature sell-off as they did previous halving events.
The rising US Dollar Strength
With the upcoming JOLTS job openings report for February and the NFP report for March on Friday, the US Dollar could continue its northbound move if the data point to a strong labor market. However, a notable decline or slowdown in job growth could weaken the bullish momentum of the US Dollar.
A small factor that could be a reason for this run-up in DXY could be due to the decreasing bets over interest-rate cuts in June.
Regardless, from a technical perspective, the DXY has cleared the 104.262 level, which prevented an ascent. Considering its current position of 104.948, it is likely another 0.90% move is possible before the Greenback faces another stiff level at 105.892.
DXY 1-week chart
As long as the US Dollar Index continues to climb higher, it would negatively impact the risk-on assets like the stock and even the cryptocurrency markets.
