Bitcoin Takes Liquidity Near $17,000 as US Dollar Shows Weakness Ahead of CPI

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Bitcoin (BTC) was below $17,000 when Wall Street opened on Dec. 8 as the US dollar threatened to weaken further.

BTC/USD 1 hour candle chart (Bitstamp). Source: TradingViewDollar Plunges as Stocks See Modest Rise

Data from Cointelegraph Markets Pro and TradingView showed that BTC/USD was virtually flat in the 24 hours to writing.

In the absence of macro clues, analysts have eyed a potential break in US dollar strength as the next volatility catalyst for cryptoassets and risk assets.

The US Dollar Index (DXY) looked set to challenge multi-day support, breaking below 105 multiple times throughout the day.

$DXYs for the first time below the 100-day MA since June 21, noted Inside Bitcoin podcast co-host Joe Cariasare.

US Dollar Index (DXY) 1 hour candle chart. Source: Trading View

Trader and analyst Pierre added that the DXY and S&P 500 may still trade sideways until November’s Consumer Price Index (CPI) arrives on December 13.

The event, as Cointelegraph reported, is a classic temporary volatility trigger.

In the meantime, SPX and DXY are still hovering around their respective D1 200 EMA, read the chart comments.

DXY reversing its resistance so far, while SPX is sitting at the D1 uptrend, an important level to defend. The two looking like all they want is more and more chops until next week, the CPI.

On BTC/USD, popular trader Daan Crypto Trades expected the trading range to widen and absorb liquidity both above and below the spot.

$BTC In a very tight range here with tons of untapped highs and lows, he told Twitter followers.

I think all of those levels will be removed and the initial move will likely become a fakeout only to go back and take the other side. It would certainly be a classic Bitcoin move. BTC/USD annotated chart. Source: Daan Crypto Trades/ Twitter Bitcoin bear market ‘endgame’?

Other modest tailwinds came from US equities in the first hour of trading on Wall Street.

Related: GBTC’s “Elevator To Hell” Sees Bitcoin Spot Price Approach 100% Premium

The S&P 500 was up 1% at the time of writing, while the Nasdaq Composite Index was up 1.2%. The move somewhat copied a day of relief in Asia, where trading ended with Hong Kong’s Hang Seng up 3.4%.

Looking at longer timeframes, however, the picture remained pessimistic on Bitcoin for many.

Popular commentator Byzantine General has publicly declared the likely start of the darkest phase of the 2022 bear market.

“Perps volume is in a pretty strong downtrend now. Market contraction, speculators capitulating,” he wrote, referring to perpetual futures markets.

“We are probably entering the final phase of the bear. But this last phase can last quite a long time.”

Data from Coinglass also showed that open interest in futures contracts continued to decline.

Bitcoin futures open interest chart. Source: Coinglass

The views, thoughts and opinions expressed herein are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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