Bitcoin price drops below $ 60,000 as dollar strength index hits 16-month highs

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Bitcoin (BTC) posted its worst daily performance since September, with the price of BTC falling 10% to below $ 59,000 on November 16. On the other hand, the US dollar hit its best level in sixteen months after spending in the US retail sector. has risen despite lingering COVID-19 fears and inflation concerns.

The BTC price established an intraday low of around $ 58,600 on Coinbase, only to retreat higher to recover $ 60,000 as psychological support. Its downward movement emerged when US President Joe Biden enacted the $ 550 billion infrastructure bill, including new tax reporting requirements for cryptocurrency users.

Some have used yesterday’s news (Infrastructure Bill) to shake the tree and get bags of cheaper #bitcoin for themselves.

David Gokhshtein (@davidgokhshtein) November 16, 2021 Stronger retail data

Meanwhile, the dollar continued its gentle uptrend, with sales in U.S. retail stores rising 1.7% in October from 0.4% the month before. This provided further evidence after an excellent report on non-farm wages last week that the U.S. economy rebounded strongly from COVID-19 lows.

As a result, investors increased their dollar bids, anticipating that the Federal Reserve would accelerate the reduction of its asset purchase program by $ 120 billion per month, resulting in earlier-than-expected rate hikes, which are remained close to zero since March 2020.

The US Dollar Index (DXY), which measures the performance of the greenback against a basket of major foreign currencies, hit an intraday high of 95.821 on November 16, its highest level since July 2020. Conversely , Bitcoin, which rebounded strongly against lower interest. the pricing environment throughout 2020 and 2021 has declined.

DXY weekly price table. Source: TradingViewMore Gaining Ground For The Dollar

Analysts expected the dollar to continue to grow higher over the next several months, with market analyst Scott Melker predicting the DXY to hit 97.50.

At the heart of Melker’s bullish outlook was a “double bottom” pattern.

In detail, double dips appear when price forms two low points on a similar horizontal level to represent a potential bullish reversal. A bullish confirmation occurs when the price breaks a specific resistance level, a high point in between the two lows to reach the target level at a length equal to the maximum height of the pattern.

So it looks like the US dollar index has come out of a similar double bottom pattern, as shown in the chart below.

DXY Daily Price Table with Double Bottom Configuration. Source: Scott Melker, TradingViewBitcoin struggles with mixed outlook

Bitcoin more than doubled in price in 2021 amid growing concerns about inflation. Nigel Green, chief executive of DeVere Group, noted that the cryptocurrency could continue to rise in value until at least the second quarter of 2022, citing the US Consumer Price Index (CPI) recent rise to its most high level in three decades.

“This latest data from the United States will only add to global fears about inflation as price pressures are intense around the world,” he noted, adding:

“During this period of inflation, Bitcoin has outperformed gold, which has been almost universally hailed as the ultimate inflation hedge so far.” BTC / USD daily price chart. Source: TradingView

Vijay Ayyar, head of Asia-Pacific with the Luno crypto exchange in Singapore, called Bitcoin’s ongoing correction a “healthy pullback”, especially after it has risen more than 175% since the start of the year. year at $ 69,000.

“It would be unusual to continue to progress without corrections,” he noted.

On the flip side, Joel Kruger, currency strategist at LMAX Group, said tighter Fed policy would start to weigh on the broader market, hitting riskier assets hardest, a reason for which Bitcoin and the rest of the crypto market fell. against a rising dollar.

Related: Bitcoin To Peak At $ 253,000, Ethereum At $ 22,000 This Cycle If 2016 Repeats By Half

Martha Reyes, head of research at Bequant, a digital asset firm, also called Bitcoin “a risky investment,” saying people would want to raise funds from the most profitable assets during times of stress.

Bitcoin was trading at $ 60,625 at the time of writing.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.

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