Bitcoin Analysis: The next few days could be crucial

Bitcoin Analysis: The next few days could be crucial

Things are getting exciting on the Bitcoin chart. In recent days we have seen more red candles than green candles, which means that the chart is looking less and less positive. Despite this, we are still officially talking about an upward movement on the 4-hour chart. Simply because the price always makes slightly higher bottoms.

In today’s analysis, we discuss how sustainable this bullish move is. To do this, let’s first take the Bitcoin chart and discuss two scenarios. In addition, we also analyze the dominance of the stablecoin USDT. This is a chart that shows what percentage of the total crypto market cap is contained in USDT. The strong correlation between Bitcoin and the dominance of this stablecoin is impressive. I’ll go into that in more detail later.

bitcoin uptrend

In the chart below, we see that price always makes slightly higher lows. After each decline, we see an increase slowing down at the red resistance line. This trendline has kept the price quite restrained for the past few days.

BTC/USDT 4H

Let’s start at the beginning. Around $25,000, the resistance turned out to be too great. The price then started to fall. We are currently seeing a small upward movement in this still bearish trend. The course can go in two directions:

Scenario 1: In the chart above, we see a bearish flag. This is a bearish pattern characterized by progressively higher lows and higher highs during a downward move. The result of this pattern is a much larger decline. This is a scenario that I certainly don’t rule out, although I’m not too convinced about it.

Scenario 2: The upward movement in the chart above is the start of a larger increase. I lean more towards that. Simply because dollar strength is hovering around resistance. This is positive for bitcoin because of its inverse correlation to the dollar (see Tuesday’s analysis). Furthermore, the S&P 500 is still above the important trendline. This is positive because Bitcoin generally follows the trend of this stock index.

There is a third reason why the price may rise – it has to do with USDT dominance. As mentioned in the introduction, there is an inverse correlation between this stablecoin and Bitcoin.

USDT dominance shows a double spike

If USDT dominance rises, Bitcoin will fall and vice versa. This actually makes a lot of sense since investors often keep their money in USDT when selling their bitcoin. This causes the price of Bitcoin to drop and the stablecoin’s dominance to increase. Simply because a larger percentage of the total cryptocurrency market cap is in USDT.

We are currently seeing a clear double top on the chart. This usually indicates that the upward movement is over and a decline is imminent. Declining USDT dominance means an increase in Bitcoin price. After all, will scenario 2 come true? We shall see.

In any case, it is very important to be aware of the influence of USDT dominance when analyzing Bitcoin. This is one of many correlations that can give you a better idea of ​​the future movements of the largest cryptocurrency.

Source: Btc Direct

Source link

follow:
\