Bitcoin has fallen steeply since setting a high around $58,000 per coin earlier this month. After now days in a row of downside, and a sweep of lows, there’s a bullish divergence brewing that could take the leading cryptocurrency by market cap soaring back higher.
At the same time, the dollar is once again weakening after a short-term bounce, and could help fuel the momentum to send Bitcoin to new records. Here’s a detailed look at why BTC could soon see a strong bounce.
Bitcoin Readies Rebound As Dollar Hits Resistance
Bitcoin has had an epic start to 2021 and a strong continuation of the bull trend that blossomed back in 2020 following Black Thursday. The direction has been only up since, with only a few bouts of corrections along the way.
Related Reading | Coinbase Bitcoin Outflows Are The Strongest Bullish Signal “Ever”
The most recent drop cut more than 20% off the price per coin, coinciding with a strong bounce in the dollar as market participants begin to reduce leverage and associated risk. However, the dollar is already back to weakness, according to one crypto analyst.
The dollar has been rejected at low timeframe resistance and BTC could respond | Source: DXY on TradingView.com
The dollar trades inversely correlated to the leading cryptocurrency by market cap, and represents one half of the asset’s base trading pair (BTCUSD).
The dollar is the global reserve currency and has been particularly strained throughout the pandemic. Inflation related to growing money supply has weakened the dollar, but benefitted Bitcoin.
How The Top Cryptocurrency Could Be Staging A Turnaround
The dollar bounce appears to have been short-term profit-taking, or a reduction in risk, and is ready to turn back down. If that happens, it could be an added catalyst for the cryptocurrency to get back to its uptrend sooner than later.
A bullish divergence could help the leading cryptocurrency refuel its jets | Source: BTCUSD on TradingView.com
A bullish divergence on Bitcoin 4H charts also points to at least a short-term recovery, if not a resumption of the prevailing and powerful uptrend.
The month of March has historically been the bloodiest month for Bitcoin, but big buyers continue to absorb the dwindling BTC supply available from institution-focused platforms like Coinbase Pro.
Related Reading | Why March Is The Bloodiest Month In Bitcoin History
A deeper correction in Bitcoin isn’t necessarily bearish, as it could allow more institutions to buy in at lower prices, who will ultimately hold stronger than the weaker hands they’re buying from.
Considering the bullish divergence and continued weakness in the dollar, Bitcoin could be right back to its uptrend in no time at all, and a bounce could already be underway.
Featured image from Deposit Photos, Charts from TradingView.com