The increase in the US dollar was affected by the increase in the price of bitcoin while the rate of increase in the Fed rate and market sentiment is fading.
Moved to $ 23,000 on February 3, erasing the latest progress of the bulls after the loss back.
Dollar Rebound Pauses Crypto
Data from Cointelegraph Markets Pro and TradingView show that BTC/USD reached a low of $23,329 on Bitstamp.
The pair on February 2 had a trip above $24,000 on Wall Street, with buyers unable to sustain momentum amid macro market volatility.
In classic fashion for interest rate announcements by the US Federal Reserve, the initial move was countered as soon as Bitcoin returned to its previous position.
The situation in the United States is worsened by the recovery of the strength of the US dollar, which began to consolidate during the day, as the dollar index (DXY) recovered significantly.
“When the dollar DXY finds support and starts to bounce back, then we will see a reversal in our crypto wallet,” warns popular trader Crypto Tony.
“It’s time to pay attention.”
Cointelegraph contributor Michaël van de Poppe sees a level of 102 for DXY that could lead to a decline related to the opposite of risk assets.
“I expect DXY to test support and now overhead resistance,” Matthew Dixon, founder and CEO of crypto rating platform Eavy, added in his own analysis.
“This would be consistent with my bearish expectations for Btc and Crypto to drop a touch before the final ‘blowoff’ high (not over IMO).
The CPI has raised new concerns
Macro-induced price pressures may persist in February, some believe.
Related: Bitcoin Bulls Need to Claim These 2 Levels as ‘Death Cross’ Continues
In the latest market update sent to Telegram channel subscribers, trading firm QCP Capital drew special attention to the next edition of the US Consumer Price Index (CPI) to be released on February 14.
“After the FOMC, we have the release of secondary data, including the important ISM services and NFP. However, the decision maker will be the Valentine’s Day CPI – and we think there is a risk to that release,” it said.
“First, the Cleveland Fed’s inflation rate is currently showing a print of >0.6% for January, although inflation has been rising in the past few months.”
Due to changes in the CPI adjustment method, QCP suspects that the figures coming in 2023 may be higher than market expectations. Psychological or not, the net effect could bring crypto bulls down.
“In Europe, the same update led to an increase in the January CPI that was released this week. Therefore, we expect that the side risk will emerge from this, either in this session or after the release of the next CPI,” QCP added.
Meanwhile, consensus on the next rate hike in mid-March was the same as on February 1 at 25 basis points, according to data from CME Group’s FedWatch tool.